ANALYSIS OF THE THREE PILLARS OF BASEL II TO SUPPORT THE HEALTH OF BANKS IN INDONESIA
The purpose of this paper is to determine the affect and function of Basel II with its 3 pillars in assisting the health of banks in Indonesia. This have a look at uses a qualitative descriptive approach, in which the researcher develops principles, collects records and knowledge however does not carry out hypotheses. Basel II calculates capital necessities according with the bank's threat profile, and presents incentives for best improvement in risk management practices in banking. In Basel II, the calculation of financial institution capital is contained in Pillar-1 minimum Capital Requirement in improving the high-quality of threat control so that in time it is able to optimize the incentives that can be received in calculating capital requirements, Pillar-2 Supervisory evaluation method and is known as the man or woman Capital Adequacy evaluation system ( ICAAP) so that it will be a challenge for banks and supervisors. It's far important to boom the competence and capacity of supervisors supported by means of a hard and fast of supervisory provisions so that during due route they could behavior an effective assessment of dangers apart from Pillar 1 and can even request a financial institution's willingness to boom capital if the calculation of the financial institution's capital is deemed inadequate. Furthermore, the lively function of the network in supervising banks is visible as decisive in order that from the start the network is anticipated so that you can assess the risks confronted and to recognize the level of capital adequacy owned via banks as summarized in Pillar 3-market area. The synergies in the application of the three Pillars contained in Basel II above cannot be separated in achieving a sound and stable banking industry and financial system
Basel II, stable banking industry, Capital Adequacy evaluation system; JEL Classification Codes: E51, G24