Jurnal Keuangan dan Perbankan Universitas Merdeka Malang
The Impact of Geopolitical Risk, State Ownership, and Group Affiliations on Indonesian Firms' Cash Reserves
Dublin Core
Title
Jurnal Keuangan dan Perbankan Universitas Merdeka Malang
The Impact of Geopolitical Risk, State Ownership, and Group Affiliations on Indonesian Firms' Cash Reserves
The Impact of Geopolitical Risk, State Ownership, and Group Affiliations on Indonesian Firms' Cash Reserves
Subject
geopolitical risk; cash reserves; state ownership; business group; Indonesia
Description
The purpose of this study is to examine whether geopolitical risks affect firms' cash reserves in Indonesia. Using a panel data analysis, we analyze the role of GPR (short for geopolitical risk) on firms' cash reserves from 2010 to 2020. The results reveal that firms spend their cash reserves when encountering geopolitical risk, specifically financially constrained firms. We extend our study by investigating the effects of state ownership and
group affiliations on firms' attitudes towards GPR. State ownership positively affects the relation of GPR and firms' cash reserves, while group affiliation doesn't show a notable impact. The result was robust to endogeneity issues. However, further studies are still needed to determine the extent of geopolitical risk impacts firms' performances. This
research is hoped to be useful for policy-makers to anticipate appropriate future regulations in order to help entrepreneurs and the country's economic growth. As for the practitioner itself, i.e., firms, business owners, and entrepreneurs, this research is expected to provide notable information about the impact of risk on firms in Indonesia. Since the
economy is shifting to a borderless economy, it can be one of the considerations in making business or economic decisions when firms are faced with geopolitical uncertainty.
group affiliations on firms' attitudes towards GPR. State ownership positively affects the relation of GPR and firms' cash reserves, while group affiliation doesn't show a notable impact. The result was robust to endogeneity issues. However, further studies are still needed to determine the extent of geopolitical risk impacts firms' performances. This
research is hoped to be useful for policy-makers to anticipate appropriate future regulations in order to help entrepreneurs and the country's economic growth. As for the practitioner itself, i.e., firms, business owners, and entrepreneurs, this research is expected to provide notable information about the impact of risk on firms in Indonesia. Since the
economy is shifting to a borderless economy, it can be one of the considerations in making business or economic decisions when firms are faced with geopolitical uncertainty.
Creator
Sandra Sandra, Sung Suk Kim
Source
DOI: 10.26905/jkdp.v26i1.6930
Publisher
Universitas Merdeka Malang
Date
January 2022
Contributor
Sri Wahyuni
Rights
ISSN: 2443-2687 (Online) ISSN: 1410-8089 (Print)
Format
PDF
Language
English
Type
Text
Coverage
Jurnal Keuangan dan Perbankan Universitas Merdeka Malang
Files
Collection
Citation
Sandra Sandra, Sung Suk Kim, “Jurnal Keuangan dan Perbankan Universitas Merdeka Malang
The Impact of Geopolitical Risk, State Ownership, and Group Affiliations on Indonesian Firms' Cash Reserves,” Repository Horizon University Indonesia, accessed December 22, 2024, https://repository.horizon.ac.id/items/show/4836.
The Impact of Geopolitical Risk, State Ownership, and Group Affiliations on Indonesian Firms' Cash Reserves,” Repository Horizon University Indonesia, accessed December 22, 2024, https://repository.horizon.ac.id/items/show/4836.