The Influence of OJK Supervisory Interventions on Risk-Taking Behavior in Indonesian Banks

Abstract

This article examines how OJK supervisory interventions influence Indonesian banks’ risk-taking behavior and why empirical findings on supervisory effectiveness often differ across studies and risk measures. Using a systematic literature review, the study consolidates peer-reviewed evidence on supervisory tools that shape bank incentives, including governance-oriented supervision, capital-related constraints, and crisis-period supervisory relief that can affect risk recognition and portfolio management. The review finds that supervisory interventions are more consistently associated with lower risk-taking when they are credible, targeted, and linked to observable remedial actions that change internal controls and decision-making, while effects are less predictable when interventions are captured only through broad prudential proxies or when risk migrates to less visible margins. The discussion organizes results by intervention channel, risk measurement approach, and moderating bank characteristics, highlighting the roles of capitalization, governance capacity, and market discipline. Overall, the synthesis concludes that supervisory effectiveness in Indonesia is conditional, measurement- sensitive, and intertwined with the broader policy environment.