Bank Indonesia’s Policy Direction  In the area of payment system, Bank Indonesia’s policy direction will be realized in steps aimed at strengthening the institutional and infrastructure elements of the domestic payment system as well as promote financial inclusion.
This would imply that in a situation where the LR becomes the binding measure for a subset of banks, banks may potentially increase SME lending at the expense of other activities, which have a preferential treatment in the riskbased framework relative to the LR framework. I would encourage further work on this matter that would present evidence on the significance of this effect.