In this situation, the incentive for financial institutions that do not have sufficient resources to develop their own risk management methods to adopt the risk management methods developed by other financial institutions increases.
In Indonesia, a lot of Chinese fintech companies that have set up marketplace lending operations have adopted a balance-sheet lending model, in which lending platforms retain loans on their books, instead of selling to other financial institutions or individual investors at a discount, said Haryono.
The term systemic risk is used to describe the possibility that the bankruptcy of a financial institution or disruptions in a particular market or payment and settlement system will pose risks to other financial institutions, other markets, or ultimately the entire financial system, through a chain of disruptions or dysfunctions.
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