Analysis Of Factors Affecting Credit Distribution To BUMN Banks Listed On The Indonesia Stock Exchange

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Analysis of Factors Affecting Credit Distribution to BUMN Banks Listed on the Indonesia Stock Exchange

Introduction

The distribution of credit in state-owned banks (BUMN) plays a crucial role in promoting economic growth and development in Indonesia. However, the factors that influence credit distribution in these banks are complex and multifaceted. This study aims to analyze the factors that affect credit distribution in BUMN banks listed on the Indonesia Stock Exchange, with a focus on the influence of third party funds (DPK), bad credit (NPL), capital adequacy ratio (CAR), and interest rates for Bank Indonesia certificates (SBI).

The Role of Third Party Funds (DPK)

Third party funds (DPK) are a crucial source of funding for banks, and their impact on credit distribution cannot be overstated. This study reveals that DPK has a positive and significant influence on credit distribution. In other words, the more funds raised from the public, the greater the bank's ability to channel credit. This makes sense because the funds raised from the public are the main sources for banks to distribute credit to debtors.

The positive relationship between DPK and credit distribution can be attributed to several factors. Firstly, DPK provides banks with the necessary liquidity to meet the credit demands of their customers. Secondly, DPK allows banks to diversify their funding sources, reducing their dependence on traditional sources of funding such as deposits. Finally, DPK enables banks to increase their lending capacity, which in turn can stimulate economic growth.

Bad Credit: Credit Distribution Inhibition

Conversely, bad credit (NPL) has a negative and significant influence on credit distribution. This means that the higher the NPL ratio, the lower the lending. This happens because banks tend to be more careful in channeling credit when many credits are bad. High risk of loss makes banks more selective in choosing debtors, so the amount of credit distributed is also reduced.

The negative relationship between NPL and credit distribution can be attributed to several factors. Firstly, high NPL ratios indicate that banks have a high risk of default, which can lead to significant losses. Secondly, high NPL ratios can erode the confidence of depositors and investors, leading to a decrease in funding. Finally, high NPL ratios can make it difficult for banks to meet their regulatory requirements, such as the capital adequacy ratio.

CAR and SBI: An Insignificant Role

This study also shows that CAR and SBI have no significant influence on credit distribution. CAR, as an indicator of bank financial health, shows that although banks have sufficient capital, this is not necessarily directly proportional to the increase in credit distribution. SBI, which is a reference for interest rates in Indonesia, also does not show a significant effect on credit distribution.

The insignificant role of CAR and SBI can be attributed to several factors. Firstly, CAR is a regulatory requirement, and banks may not necessarily use it as a guide for credit distribution. Secondly, SBI is a reference rate, and banks may not necessarily use it as a benchmark for setting interest rates. Finally, banks may have internal policies that are more dominant in determining credit interest rates.

Analysis Methods and Techniques

This study uses secondary data from BUMN banks listed on the Indonesia Stock Exchange for the 2007-2014 period. The analysis technique used is multiple linear regression. This technique allows us to analyze the relationship between multiple independent variables (DPK, NPL, CAR, and SBI) and the dependent variable (credit distribution).

Implications and Recommendations

The results of this study have important implications for state-owned banks in increasing credit distribution. Banks need to focus on strategies to increase DPK, as well as managing NPLs to remain low. In addition, this study also shows that state-owned banks need to consider other factors that might affect credit distribution, such as macroeconomic conditions, banking regulations, and bank internal strategies.

Conclusion

This study succeeded in identifying the main factors that influenced the distribution of credit in state-owned banks. The results of this study are expected to be a consideration for banks in making strategic decisions related to lending and encouraging national economic growth. By understanding the factors that influence credit distribution, banks can develop effective strategies to increase lending and promote economic growth.

Limitations of the Study

This study has several limitations. Firstly, the study uses secondary data, which may not be comprehensive or up-to-date. Secondly, the study focuses on BUMN banks listed on the Indonesia Stock Exchange, which may not be representative of all banks in Indonesia. Finally, the study uses a multiple linear regression analysis, which may not capture the complexity of the relationships between the variables.

Future Research Directions

This study provides several avenues for future research. Firstly, researchers can investigate the impact of macroeconomic conditions on credit distribution. Secondly, researchers can examine the role of banking regulations in influencing credit distribution. Finally, researchers can analyze the impact of bank internal strategies on credit distribution.

References

This study uses several references, including:

  • Bank Indonesia (2014). Indonesia Financial System Stability Report 2014.
  • World Bank (2014). Indonesia Economic Update 2014.
  • Bank Indonesia (2015). Indonesia Financial System Stability Report 2015.

Appendix

This study includes an appendix that provides additional information on the data and methods used in the study.
Frequently Asked Questions (FAQs) on Analysis of Factors Affecting Credit Distribution to BUMN Banks Listed on the Indonesia Stock Exchange

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the factors that affect credit distribution in state-owned banks (BUMN) listed on the Indonesia Stock Exchange, with a focus on the influence of third party funds (DPK), bad credit (NPL), capital adequacy ratio (CAR), and interest rates for Bank Indonesia certificates (SBI).

Q: What are the key findings of this study?

A: The key findings of this study are:

  • DPK has a positive and significant influence on credit distribution.
  • NPL has a negative and significant influence on credit distribution.
  • CAR and SBI have no significant influence on credit distribution.

Q: What are the implications of this study for state-owned banks?

A: The implications of this study for state-owned banks are:

  • Banks need to focus on strategies to increase DPK, as well as managing NPLs to remain low.
  • Banks need to consider other factors that might affect credit distribution, such as macroeconomic conditions, banking regulations, and bank internal strategies.

Q: What are the limitations of this study?

A: The limitations of this study are:

  • The study uses secondary data, which may not be comprehensive or up-to-date.
  • The study focuses on BUMN banks listed on the Indonesia Stock Exchange, which may not be representative of all banks in Indonesia.
  • The study uses a multiple linear regression analysis, which may not capture the complexity of the relationships between the variables.

Q: What are the future research directions based on this study?

A: The future research directions based on this study are:

  • Investigating the impact of macroeconomic conditions on credit distribution.
  • Examining the role of banking regulations in influencing credit distribution.
  • Analyzing the impact of bank internal strategies on credit distribution.

Q: What are the references used in this study?

A: The references used in this study are:

  • Bank Indonesia (2014). Indonesia Financial System Stability Report 2014.
  • World Bank (2014). Indonesia Economic Update 2014.
  • Bank Indonesia (2015). Indonesia Financial System Stability Report 2015.

Q: What is the appendix of this study?

A: The appendix of this study provides additional information on the data and methods used in the study.

Q: What are the conclusions of this study?

A: The conclusions of this study are:

  • This study succeeded in identifying the main factors that influenced the distribution of credit in state-owned banks.
  • The results of this study are expected to be a consideration for banks in making strategic decisions related to lending and encouraging national economic growth.

Q: What are the recommendations of this study?

A: The recommendations of this study are:

  • Banks need to focus on strategies to increase DPK, as well as managing NPLs to remain low.
  • Banks need to consider other factors that might affect credit distribution, such as macroeconomic conditions, banking regulations, and bank internal strategies.

Q: What are the implications of this study for policymakers?

A: The implications of this study for policymakers are:

  • Policymakers need to consider the factors that affect credit distribution in state-owned banks when making decisions related to banking regulations and economic policies.
  • Policymakers need to ensure that state-owned banks have sufficient funding and resources to meet the credit demands of their customers.

Q: What are the implications of this study for researchers?

A: The implications of this study for researchers are:

  • Researchers need to continue studying the factors that affect credit distribution in state-owned banks.
  • Researchers need to investigate the impact of macroeconomic conditions, banking regulations, and bank internal strategies on credit distribution.

Q: What are the implications of this study for the banking industry?

A: The implications of this study for the banking industry are:

  • The banking industry needs to focus on strategies to increase DPK, as well as managing NPLs to remain low.
  • The banking industry needs to consider other factors that might affect credit distribution, such as macroeconomic conditions, banking regulations, and bank internal strategies.