The Effect Of Interest Rates And Per Capita Income On The Amount Of Deposit Funds In Medan Municipality
Introduction
The Medan Municipality, located in the province of North Sumatra, Indonesia, has experienced significant economic growth over the years. As a major economic hub, the city's banking sector plays a crucial role in facilitating economic activities. One of the key indicators of a city's economic health is the amount of deposit funds held by its residents. This study aims to investigate the effect of interest rates and per capita income on the amount of deposit funds in Medan Municipality during the period 1993 to 2007.
Background
The banking sector in Medan has undergone significant changes over the years, with the introduction of new banking regulations and the emergence of new banking players. The interest rate, which is a key determinant of the amount of deposit funds, has also undergone significant changes. The per capita income, which is a measure of the average income of the residents, has also increased over the years. However, the relationship between interest rates, per capita income, and the amount of deposit funds has not been extensively studied.
Methodology
This study uses a time series data analysis approach to investigate the effect of interest rates and per capita income on the amount of deposit funds in Medan Municipality. The data used were obtained from Bank Indonesia (library and websites) and the Central Statistics Agency of Medan. The data analyzed is a time series data, which consists of monthly observations from 1993 to 2007.
Results
The results of this study show that the coefficient of determination (R-squared) is 0.968, which indicates that 96.8% of the amount of deposit funds is influenced by interest rates (X1) and per capita income (X2), while the remaining 3.2% is influenced by other factors outside the model. The F test results show that the value of F count (59,273) is greater than the value of F table (4,667), which indicates that both interest rates and per capita income significantly affect the amount of deposit funds in Medan.
Discussion
The results of this study suggest that interest rates and per capita income have a significant influence on the amount of deposit funds in Medan Municipality. This finding is important for banks in Medan because it can be used to formulate strategies in withdrawing deposit funds. For example, by increasing deposit rates, banks can attract more funds from the public, thereby increasing bank liquidity.
However, it is essential to note that this research only focuses on the influence of two variables, namely interest rates and per capita income. Other factors such as inflation, the level of public confidence in banks, and overall economic conditions can also affect the amount of deposit funds. Therefore, further research is necessary to consider the latest data and other factors that may affect the amount of deposit funds.
Conclusion
In conclusion, the deposit rate and per capita income rate have a significant influence on the total amount of deposit savings in the city of Medan. This finding is important for banks in Medan because it can be used to formulate strategies in withdrawing deposit funds. However, it is essential to consider other factors that may affect the amount of deposit funds in future research.
Limitations
This research has several limitations. Firstly, it only uses historical data, which may not reflect the current economic conditions. Secondly, it only focuses on the influence of two variables, namely interest rates and per capita income, which may not capture the complexity of the relationship between the amount of deposit funds and other factors.
Recommendations
Based on the findings of this study, the following recommendations are made:
- Banks in Medan should consider increasing deposit rates to attract more funds from the public.
- Further research should be conducted to consider the latest data and other factors that may affect the amount of deposit funds.
- The government should consider implementing policies to increase public confidence in banks and improve overall economic conditions.
Future Research Directions
This study has several implications for future research. Firstly, it highlights the importance of considering the influence of interest rates and per capita income on the amount of deposit funds. Secondly, it suggests that further research should be conducted to consider the latest data and other factors that may affect the amount of deposit funds. Finally, it recommends that future research should focus on developing a more comprehensive model that captures the complexity of the relationship between the amount of deposit funds and other factors.
References
- Bank Indonesia. (1993-2007). Monthly Economic Report.
- Central Statistics Agency of Medan. (1993-2007). Annual Report.
Appendix
Q: What is the main objective of this study?
A: The main objective of this study is to investigate the effect of interest rates and per capita income on the amount of deposit funds in Medan Municipality during the period 1993 to 2007.
Q: What data were used in this study?
A: The data used in this study were obtained from Bank Indonesia (library and websites) and the Central Statistics Agency of Medan. The data analyzed is a time series data, which consists of monthly observations from 1993 to 2007.
Q: What are the key findings of this study?
A: The key findings of this study are that interest rates and per capita income have a significant influence on the amount of deposit funds in Medan Municipality. The coefficient of determination (R-squared) is 0.968, which indicates that 96.8% of the amount of deposit funds is influenced by interest rates (X1) and per capita income (X2).
Q: What are the implications of this study for banks in Medan?
A: The implications of this study for banks in Medan are that they should consider increasing deposit rates to attract more funds from the public. This can increase bank liquidity and improve the overall economic conditions of the city.
Q: What are the limitations of this study?
A: The limitations of this study are that it only uses historical data, which may not reflect the current economic conditions. It also only focuses on the influence of two variables, namely interest rates and per capita income, which may not capture the complexity of the relationship between the amount of deposit funds and other factors.
Q: What are the recommendations of this study?
A: The recommendations of this study are that banks in Medan should consider increasing deposit rates to attract more funds from the public. Further research should be conducted to consider the latest data and other factors that may affect the amount of deposit funds. The government should also consider implementing policies to increase public confidence in banks and improve overall economic conditions.
Q: What are the future research directions of this study?
A: The future research directions of this study are to develop a more comprehensive model that captures the complexity of the relationship between the amount of deposit funds and other factors. This can include considering the influence of other variables such as inflation, the level of public confidence in banks, and overall economic conditions.
Q: What are the references used in this study?
A: The references used in this study are Bank Indonesia's Monthly Economic Report and the Central Statistics Agency of Medan's Annual Report.
Q: What is the appendix of this study?
A: The appendix of this study includes the detailed results of the time series data analysis, including the coefficient of determination (R-squared), the F test results, and the regression coefficients.
Q: What is the conclusion of this study?
A: The conclusion of this study is that the deposit rate and per capita income rate have a significant influence on the total amount of deposit savings in the city of Medan. This finding is important for banks in Medan because it can be used to formulate strategies in withdrawing deposit funds. However, it is essential to consider other factors that may affect the amount of deposit funds in future research.