Proceedings of the 8th International Conference on Accounting, Management, and Economics (ICAME 2023)

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Determinants of Private Investment In Indonesia: An Error Correction Model Approach

Authors
Retno Fitrianti1, *, Sri Undai Nurbayani1, Nur Dwiana Sari Saudi1, Fitriwati Djam’an1, Muhammad Fadel Dwi Makmur1
1Hasanuddin University, Makassar, Indonesia
*Corresponding author. Email: retno_fitrianti@fe.unhas.ac.id
Corresponding Author
Retno Fitrianti
Available Online 22 May 2024.
DOI
10.2991/978-94-6463-400-6_65How to use a DOI?
Keywords
Investment; Interest Rate; Government Spending; Risk
Abstract

The objective of this study is to examine the impact of independent variables on dependent variables over both the short and long term. The study examines interest rates, government spending, and risk as independent variables, with investment as the dependent variable. The analysis utilized time series data from 1996 to 2020 in Indonesia and using multiple regression models and an Error Correction Model (ECM). The findings indicated a strong favorable impact of both interest rates and government spending on investment. Conversely, risk factors have a considerable negative effect on investment in Indonesia both in the short and long run. The study examines the impact of interest rates on investment using Bank Indonesia’s interest rate data, which differs from the interest rates offered by commercial or private banks in Indonesia. The variable of government expenditure has a positive impact on investment, suggesting that government intervention is causing a crowding effect on investment. This means that investments in infrastructure improvements, health services, and education are increasing activities in the capital market. Ultimately, the risk factor has a detrimental impact on investment due to its perceived negative nature. an uncertainty variable that can suppress the amount of investment in Indonesia.

Copyright
© 2024 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 8th International Conference on Accounting, Management, and Economics (ICAME 2023)
Series
Advances in Economics, Business and Management Research
Publication Date
22 May 2024
ISBN
978-94-6463-400-6
ISSN
2352-5428
DOI
10.2991/978-94-6463-400-6_65How to use a DOI?
Copyright
© 2024 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Retno Fitrianti
AU  - Sri Undai Nurbayani
AU  - Nur Dwiana Sari Saudi
AU  - Fitriwati Djam’an
AU  - Muhammad Fadel Dwi Makmur
PY  - 2024
DA  - 2024/05/22
TI  - Determinants of Private Investment In Indonesia: An Error Correction Model Approach
BT  - Proceedings of the 8th International Conference on Accounting, Management, and Economics (ICAME 2023)
PB  - Atlantis Press
SP  - 853
EP  - 866
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-400-6_65
DO  - 10.2991/978-94-6463-400-6_65
ID  - Fitrianti2024
ER  -