Global Financial Cycle Transmission to Indonesian Commercial Bank Balance Sheets

One-line take-away. Indonesia's post-2016 macroprudential framework contains the downside of the global financial cycle but not the upside — the build-up of exposures during accommodation phases remains an open margin for policy design.

Abstract. Using a bank-year panel of all 97 Indonesian commercial banks (BUK) over 2002–2025 and a composite global financial cycle factor from five US financial-market series, this paper documents a slow-build credit response of +4.6 log points per one-standard-deviation cycle shock at the three-year horizon. The transmission intensifies roughly four-fold after 2016, coinciding with the Indonesian macroprudential consolidation. Ownership dominates size in the heterogeneity of the response. Episode event-studies of the Fed-hike 2022–23 window reveal an asymmetric pattern: the macroprudential framework contains the downside of the cycle but does not contain the upside.