A new report from the Asian Development Bank takes Indonesian banks to task. Or, it is as critical of banks’ lending practices as the rules of international diplomacy will allow. “The efficiency of Indonesia’s domestic financial intermediation is among the lowest in Southeast Asia,” the ADB says.
Indeed, the ratio of domestic credit to GDP in Indonesia is much lower than most of its neighbours. The spread between lending and deposit rates in the country is also wider and more volatile than elsewhere in the region. Although not a “critical constraint to private investment,” as the ADB puts it, more affordable, available credit could help Indonesia more quickly achieve its considerable economic potential.