The effect of systematic and unsystematic determinants on loan (financing) to deposit ratio in Indonesian banking

https://doi.org/10.35912/amor.v5i1.1657
Published: Dec 22, 2023

Abstract:

Purpose: This study compares the determinants of liquidity of Islamic Banks (IBs) and Conventional Banks (CBs) based on the loan-to-deposit ratio (LDR) and financing-to-deposit ratio (FDR) between 2016 and 2020.

Research Methodology: The data analysis technique used was panel data regression.

Results: The results show Economic growth has a positive effect on banking liquidity risk, while non-performing loans (financing) have a negative effect on banking liquidity risk.

Limitations: The frame time in this research was 2016-2020 which, before Bank Syariah Mandiri, Bank Rakyat Indonesia (BRI) Syariah, and Bank Negara Indonesia (BNI) Syariah merged into Bank Syariah Indonesia.

Contribution: This study can be used as a reference for preparing or perfecting regulations that can be bolder in expanding credit (financing). Commercial banks are expected to be able to manage liquidity so that the liquidity ratio is not less than or exceeds the tolerance limit, especially for CBs, and are used as evaluation material for the performance of IBs, especially CBs.

Novelty: Several previous studies conducted separate analyses of the determinants of LDR and FDR in one type of commercial bank and showed contradictory results. This research did not conduct separate analyses in one type of bank but combined the determinants so that they could cause liquidity risk by measuring LDR on BUK and FDR on BUS to discuss these conflicting findings.

Keywords:
1. Islamic banks
2. conventional banks
3. loan to deposit ratio
4. non-performing loan
5. economic growth
Authors:
1 . Mohammad Iqbal Irfany
Faculty of Economics and Management, IPB University, Indonesia
2 . Muhammad Fikra Yafi Ulhaqqi
Faculty of Economics and Management, IPB University, Indonesia
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How to Cite
Irfany, M. I. ., & Ulhaqqi, M. F. Y. . (2023). The effect of systematic and unsystematic determinants on loan (financing) to deposit ratio in Indonesian banking. Annals of Management and Organization Research, 5(1), 61–72. https://doi.org/10.35912/amor.v5i1.1657
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Vol. 5 No. 1 (2023): August
Articles
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References

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    Arisandi, D. (2008). Analisis faktor penawaran kredit pada bank umum di Indonesia. Universitas Gunadarma.

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    Peraturan Bank Indonesia Nomor 13/1/PBI/2011 Tentang Penilaian Tingkat Kesehatan Bank Umum.

    Peraturan Bank Indonesia Nomor 17/11/PBI/2015 Tentang Perubahan Atas Peraturan Bank Indonesia Nomor 15/15/PBI/2013 Tentang Giro Wajib Minimum Bank Umum Dalam Rupiah Dan Valuta Asing Bagi Bank Umum Konvensional.

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    Raghavan, R. (2003). Risk management in banks. CHARTERED ACCOUNTANT-NEW DELHI-, 51(8), 841-851.

    Raharjo, A. W. (2020). Bank dan lembaga keuangan non bank di Indonesia.

    Ramadhani, A. N., & Indriani, A. (2016). Analisis Pengaruh Size, Capital Adequacy Ratio (CAR), Return on Asset (ROA), Non Performing Loan (NPL), dan Inflasi terhadap Loan to Deposit Ratio (LDR). Diponegoro of Journal Management, 5(2).

    Ruozi, R., Ferrari, P., Ruozi, R., & Ferrari, P. (2013). Liquidity risk management in banks: economic and regulatory issues: Springer.

    Sharma, M. (2005). Problem of NPAs and its impact on strategic banking variables. Finance India, 19(3), 953.

    Siahaan, D., & Asandimitra, N. (2016). Pengaruh Likuiditas Dan Kualitas Aset terhadap Profitabilitas pada Bank Umum Nasional (Studi pada Bursa Efek Indonesia Periode 2010-2014). BISMA (Bisnis Dan Manajemen), 9(1), 1-12.

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    Van Horne, J. C., & Wachowicz, J. M. (2005). Fundamentals of financial management: Pearson education.

    Wang, Y.-J. (2002). Liquidity management, operating performance, and corporate value: evidence from Japan and Taiwan. Journal of Multinational Financial Management, 12(2), 159-169.

    Wijaya, R. (2019). Analisis Perkembangan Return On Assets (ROA) dan Return On Equity (ROE) untuk Mengukur Kinerja Keuangan. Jurnal Ilmu Manajemen, 9(1), 40-51.

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  2. Abusharba, M. T., Triyuwono, I., Ismail, M., & Rahman, A. F. (2013). Determinants of capital adequacy ratio (CAR) in Indonesian Islamic commercial banks. Global review of accounting and finance, 4(1), 159-170.
  3. Ahmed, N., Ahmed, Z., & Naqvi, I. H. (2011). Liquidity risk and Islamic banks: Evidence from Pakistan. Interdisciplinary Journal of Research in Business, 1(9), 99-102.
  4. Al-Khouri, R. (2012). Bank characteristics and liquidity transformation: The case of GCC banks. International Journal of economics and Finance, 4(12), 114-120.
  5. Allen, F., & Santomero, A. M. (1997). The theory of financial intermediation. Journal of banking & finance, 21(11-12), 1461-1485.
  6. Arena, M. (2008). Bank failures and bank fundamentals: A comparative analysis of Latin America and East Asia during the nineties using bank-level data. Journal of banking & finance, 32(2), 299-310.
  7. Arfiyanti, D., & Pertiwi, I. F. P. (2020). Determinant of Indonesian Islamic Banks Liquidity Risk. Journal of Business and Management Review, 1(4), 281-294.
  8. Arisandi, D. (2008). Analisis faktor penawaran kredit pada bank umum di Indonesia. Universitas Gunadarma.
  9. Auronen, L. (2003). Asymmetric information: theory and applications. Paper presented at the Seminar of Strategy and International Business as Helsinki University of Technology.
  10. Baltagi, B. H. (2005). Econometric Analysis of Panel Data: John Wiley & Sons Ltd.
  11. Berger, A. N., & Sedunov, J. (2017). Bank liquidity creation and real economic output. Journal of banking & finance, 81, 1-19.
  12. Bhegawati, D. A. S., & Utama, M. S. (2020). The role of banking in Indonesia in increasing economic growth and community welfare. South East Asia Journal of Contemporary Business, Economics and Law, 22(1), 83-91.
  13. Caggiano, G., & Calice, P. (2011). The macroeconomic impact of higher capital ratios on African economies: African Development Bank Group.
  14. Cantor, R. (2001). Moody’s investors service response to the consultative paper issued by the Basel Committee on Bank Supervision “A new capital adequacy framework”. Journal of banking & finance, 25(1), 171-185.
  15. Chen, Y.-K., Shen, C.-H., Kao, L., & Yeh, C.-Y. (2018). Bank liquidity risk and performance. Review of pacific basin financial markets and policies, 21(01), 1850007.
  16. Choon, L., Hooi, L., Murthi, L., Yi, T., & Shven, T. (2013). The determinants influencing liquidity of Malaysia commercial banks, and its implication for relevant bodies: evidence from 15 Malaysian commercial banks. Universiti Tunku Abdul Rahman, Kampar.
  17. Deky, D. A. (2016). Pengaruh Manajemen Likuiditas Terhadap Kinerja Bank Pembiayaan Rakyat Syariah (Bprs) Di Indonesia. I-Finance: a Research Journal on Islamic Finance, 2(1), 75-85.
  18. Dendawijaya, L. (2005). Manajemen Perbankan Edisi 2. Bogor: Ghalia Indonesia.
  19. Fadillah, E. N., & Aji, T. S. (2018). Pengaruh faktor internal dan inflasi terhadap likuiditas pada Bank Pembangunan Daerah di Indonesia. Jurnal Ilmu Manajemen, 6(03), 327-330.
  20. Fitria, T. N. (2015). Perkembangan bank syariah di Indonesia. Jurnal Ilmiah Ekonomi Islam, 1(02).
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  22. Harianto, S. (2017). Rasio Keuangan dan Pengaruhnya Terhadap Profitabilitas Pada Bank Pembiayaan Rakyat Syariah. Esensi: Jurnal Bisnis dan Manajemen, 7(1), 41-48.
  23. Hussain, A., Kijkasiwat, P., Ijaz, B. M., & Deari, F. (2022). Determinants Of Systematic And Unsystematic Liquidity Risk In Islamic Banks. Journal of Islamic Monetary Economics and Finance, 8(2), 325-340.
  24. Ichsan, N. (2013). Pengelolaan Likuiditas Bank Syariah.
  25. Islam, M. M., & Chowdhury, H. A. (2009). A comparative study of liquidity management of an Islamic bank and a conventional bank: the evidence from Bangladesh. Journal of Islamic Economics, Banking and Finance, 5(1), 89-108.
  26. Jedidia, K. B., & Hamza, H. (2015). Determinants of liquidity risk in Islamic banks: A panel study. Islamic Management and Business, 2(2), 137-146.
  27. Kasmir. (2018). Analisis Laporan Keuangan (11 ed.). Depok: RajaGrafindo Persada.
  28. Khan, M. S., Scheule, H., & Wu, E. (2017). Funding liquidity and bank risk taking. Journal of banking & finance, 82, 203-216.
  29. Mohamad, A. A. S., Mohamad, M. T., & Samsudin, M. L. (2013). How Islamic banks of Malaysia managing liquidity? An emphasis on confronting economic cycles. International Journal of Business and Social Science, 4(7), 253-263.
  30. Murphy, A. (2008). An analysis of the financial crisis of 2008: causes and solutions. An Analysis of the Financial Crisis.
  31. Ongore, V. O., & Kusa, G. B. (2013). Determinants of financial performance of commercial banks in Kenya. International Journal of Economics and Financial Issues, 3(1), 237-252.
  32. Peraturan Bank Indonesia Nomor 11/25//PBI/2009 Perubahan Atas Peraturan Bank Indonesia Nomor 5/8/PBI/2003 Tentang Penerapan Manajemen Risiko Bagi Bank Umum.
  33. Peraturan Bank Indonesia Nomor 13/1/PBI/2011 Tentang Penilaian Tingkat Kesehatan Bank Umum.
  34. Peraturan Bank Indonesia Nomor 17/11/PBI/2015 Tentang Perubahan Atas Peraturan Bank Indonesia Nomor 15/15/PBI/2013 Tentang Giro Wajib Minimum Bank Umum Dalam Rupiah Dan Valuta Asing Bagi Bank Umum Konvensional.
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  37. Putri, I. G. A. P. T., & Suryantini, N. P. S. (2017). Determinasi Loan To Deposit Ratio Pada Bank Campuran di Indonesia. Udayana University.
  38. Raghavan, R. (2003). Risk management in banks. CHARTERED ACCOUNTANT-NEW DELHI-, 51(8), 841-851.
  39. Raharjo, A. W. (2020). Bank dan lembaga keuangan non bank di Indonesia.
  40. Ramadhani, A. N., & Indriani, A. (2016). Analisis Pengaruh Size, Capital Adequacy Ratio (CAR), Return on Asset (ROA), Non Performing Loan (NPL), dan Inflasi terhadap Loan to Deposit Ratio (LDR). Diponegoro of Journal Management, 5(2).
  41. Ruozi, R., Ferrari, P., Ruozi, R., & Ferrari, P. (2013). Liquidity risk management in banks: economic and regulatory issues: Springer.
  42. Sharma, M. (2005). Problem of NPAs and its impact on strategic banking variables. Finance India, 19(3), 953.
  43. Siahaan, D., & Asandimitra, N. (2016). Pengaruh Likuiditas Dan Kualitas Aset terhadap Profitabilitas pada Bank Umum Nasional (Studi pada Bursa Efek Indonesia Periode 2010-2014). BISMA (Bisnis Dan Manajemen), 9(1), 1-12.
  44. Somantri, Y. F., & Sukmana, W. (2019). Analisis Faktor-Faktor yang Mempengaruhi Financing to Deposit Ratio (FDR) pada Bank Umum Syariah di Indonesia. Berkala Akuntansi dan Keuangan Indonesia, 4(2), 61-71.
  45. Surat Keputusan Majelis Ulama Indonesia Nomor Kep-98/MUI/III/2001 tentang Susunan Pengurus DSN-MUI.
  46. Undang-Undang Republik Indonesia Nomor 10 Tahun 1998 Tentang Perubahan atas Undang-Undang Nomor 7 Tahun 1992 Tentang Perbankan.
  47. Undang-Undang Republik Indonesia Nomor 21 Tahun 2008 Tentang Perbankan Syariah.
  48. Van Horne, J. C., & Wachowicz, J. M. (2005). Fundamentals of financial management: Pearson education.
  49. Wang, Y.-J. (2002). Liquidity management, operating performance, and corporate value: evidence from Japan and Taiwan. Journal of Multinational Financial Management, 12(2), 159-169.
  50. Wijaya, R. (2019). Analisis Perkembangan Return On Assets (ROA) dan Return On Equity (ROE) untuk Mengukur Kinerja Keuangan. Jurnal Ilmu Manajemen, 9(1), 40-51.
  51. Wuryandani, G., Ginting, R., Iskandar, D., & Sitompul, Z. (2014). Pengelolaan dana dan likuiditas bank. Buletin Ekonomi Moneter dan Perbankan, 16(3), 247-276.