Indonesia has the world’s most profitable banks, and that’s a problem

February 7, 2013
February 7, 2013


A link from Bloomberg

In Indonesia, the country’s largest banks have a world-beating average return on investment of $23—more than twice the $9 average in the United States—but that’s not necessarily great news. These banks make their profits by lending at high interest rates that reflect a lack of competition, inefficient financial infrastructure and regulatory restrictions. The country’s central bank is taking measures to lower interest rates, and that’s good news: Despite Indonesia’s speedy growth, only 28% of its population have taken out loans—the lowest ratio among Asian countries.

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