THE IMPACT OF MACROECONOMIC STRUKTURES FOR THE BANGKING INDONESIA

Rifa'i, Khamdan THE IMPACT OF MACROECONOMIC STRUKTURES FOR THE BANGKING INDONESIA. THE IMPACT OF MACROECONOMIC STRUKTURES FOR THE BANGKING INDONESIA.

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Abstract

This study aims to find the impact of macroeconomic activities on the conditions of banking stability.
Macroeconomic activity is reflected in movements in economic growth, exchange rates, inflation, trade balance, and
monetary policy. While the condition of banking stability is reflected in several dimensions of banking risk such as
Non-Performing Loans (NPL), Loan to Deposit Ratio (LDR) and Return on Assets (ROA). This study uses the
Vector Error Correction Model (VECM) analysis technique The data used is in the form of time series data from
January 2011 to October 2018 due to consideration of the limited data of each variable, especially Commercial
Banks (according to the metadata from the Financial Services Authority). The results of the analysis show that a
decrease in production and trade capacity can cause the NPL ratio to increase, the LDR and ROA ratio falls. Also,
an important finding in this study is that monetary policy tightening in the form of a BI rate has a relatively significant
impact on the increase in the NPL ratio. While tightening monetary policy the BI rate is not significant to changes in
the LDR and ROA ratios. The possibility of this is due to the transmission of monetary policy The BI rate has a long
lag or long transmission to LDR and ROA, so that it has a relatively long-term impact. The research contribution can
be one of the references for financial services authorities and bank managers in Indonesia to be able to maintain
stability and performance due to the spillover effect of the macroeconomic structure

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