THE IMPACT OF NSFR IMPLEMENTATION ON BANK FINANCIAL STABILITY IN INDONESIA AFTER BASEL III WITH MACROECONOMIC FACTORS AS MODERATING VARIABLES: A LITERATURE REVIEW

Abstract

This study examines the impact of the Net Stable Funding Ratio (NSFR), a key component of the Basel III regulatory framework, on the financial stability of commercial banks in Indonesia following its implementation. Despite its formal adoption in 2021, empirical evidence regarding the effectiveness of NSFR in the Indonesian context remains limited. This study fills this gap by incorporating macroeconomic factors—namely inflation, interest rates, and GDP growth—as moderating variables to assess their influence on the NSFR-stability relationship. The study also explores whether the effect of NSFR varies according to bank size. A quantitative method is employed using panel data from commercial banks and macroeconomic indicators spanning 2015 to 2023. Financial stability is measured through multiple indicators, including the Z-score, Return on Assets (ROA), Capital Adequacy Ratio (CAR), and Non-Performing Loan (NPL) ratios. The findings are expected to confirm that a higher NSFR improves financial stability, with macroeconomic factors either reinforcing or weakening this effect. This study contributes theoretically and practically by enhancing the understanding of liquidity regulation in emerging markets and offering insights for policymakers and bank managers in aligning regulatory compliance with macroeconomic dynamics.