Determinants of Bank Loans in Indonesia

DOI

10.2991/assehr.k.210531.064How to use a DOI?

Keywords

Loan, Market Power, Nonperforming Loan, Bank

Abstract

This study intends to analyze the effect of the level of nonperforming loans (NPL) on the lending behavior of banks in Indonesia. This study also seeks to understand whether other variables, such as bank capitalization and bank market power, influence the relationship between NPLs and lending behavior at banks in Indonesia. The macroeconomic factors that is accommodated is the Indonesian economic cycle. This study uses data from commercial banks that run conventional bank businesses in Indonesia and operated from 2007 to 2017. The factors that determine the level of credit growth in Indonesia are deposit growth, the ratio of nonperforming loans in the previous year, the bank capital adequacy ratio, Gross Domestic Product (GDP), real growth, and the Indonesian benchmark interest rate. The effect of credit risk, which can be represented by the ratio of bank’s nonperforming loans to the credit that it provides is smaller if the bank has high market power. The credit growth provided by banks in the BUKU IV category was more unaffected by the previous year’s bad credit ratio compared with other bank categories. Banks owned by the government and banks owned by non-government exhibited no differences in lending behavior. Big banks’ lending behavior is also not different from that of other banks.

Copyright

© 2021, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Theresa Jessica
AU  - Dony Abdul Chalid
PY  - 2021
DA  - 2021/05/31
TI  - Determinants of Bank Loans in Indonesia
BT  - Proceedings of the Asia-Pacific Research in Social Sciences and Humanities Universitas Indonesia Conference (APRISH 2019)
PB  - Atlantis Press
SP  - 505
EP  - 512
SN  - 2352-5398
UR  - https://doi.org/10.2991/assehr.k.210531.064
DO  - 10.2991/assehr.k.210531.064
ID  - Jessica2021
ER  -