Effect Of Bank And Macro Economic Performance On Bank Capital Supporters In Indonesia

Putra Indra, Abraham Prima, Farah Margaretha Leon

Abstract


This study was conducted to examine the effect of bank performance and macroeconomics on capital buffer in banks listed on the Indonesia stock exchange in the 2014-2018 period. There are 26 banks that become the sample of this study after purposive sampling. The capital buffer used is the difference between the Capital Adequate Ratio and the minimum capital determined by the regulator. While the independent variables used consist of bank performance, namely Return on Equity, Bank Size, Liquidity, Non-Performing Loans, Net Profit, Loan Growth and Total Loans over Total Assets. Macroeconomic variables also become a factor that is analyzed on the effect of bank capital buffer. By using the Generalized Method of Moment (GMM) regression model, it can be seen that the bank's performance variables measured through Return on Equity, Liquidity, Net Profit and Total Loan over Total Assets have a significant effect on banking capital buffer in Indonesia. Whereas macroeconomic variables measured through GDP do not have a significant effect on banking capital buffer in Indonesia.


Keywords


Capital Adequate Ratio; capital buffer; bank performance; macro economics

Full Text:

PDF

Article Metrics

Abstract views : 23| PDF views : 0

References


Adesina, K.S. & Mwamba, J.M. (2017). Lingking bank regulatory capital buffer to business cycle fluctuations. Journal of Economics Studies. Vol. 45 No 3, pp. 565-585.

Apostolopous, N. & Liargovas, P. (2016). Regional parameters and solar energy enterprises:Purposive sampling and group AHP approach. International Journal of Energy Sector Management. Vol. 10, pp. 19-37.

Atici, G. & Gursoy, G. (2013) The Determinants of Capital Buffer in the Turkish Banking System. International Business Research. Vol. 6, pp. 224-234.

Belem, V.C. & Gartner, I.C. (2016). Emperical analysis of Brazilian banks’ capital buffer during the period 2001-2011. USP San Paulo. Vol. 27, pp. 113-124.

Busun, S.K & Kasman, A. (2015). A Note on Bank Capital Buffer, Portfolio Risk and Business Cycle. Ege Academic Review, pp. 1-7.

Chu, H. & Lonergan, W. (2015) The Value of Total Assets. The Finsia of Applied Finance.

Durafe, A. & Singh, M. (2015). Banks’ Capital Buffer and Business Cycle: Evidence for India. IES Management College and Research Centre. Vol. 8 (2).

Fonsesca, A.R., Gonzalez, F. & Pereira da Silva, L. (2010). Cyclical Effects of Bank Capital Buffers with Imperfect Credit Markets: International Evidence. Banco Central do Brasil. Vol. 216.

Garcia-Suaza, A.F., Gomez-Gonzalez, J,E., Pablon, A.M. & Tenjo-Galarza, F. (2012). The cyclical behaviour of bank capital buffers in an emerging economy: size does matter. Economic Modelling. Vol. 29, pp. 1612-1617.

Gosh, S. (2016). Capital Buffer, Credit Risk and Liquidity Behaviour: Evidence for GCG Banks. Comparative Economics Studies. Vol. 58, pp. 539-569.

Jokipii, Tehri, Milne & Alistair. (2009). Bank capital buffer and risk adjustment decisions. Journal of Financial Stability. Vol. 7, pp. 165-178.

Le, C.H.A. (2016). Macro-financial linkages and bank behaviour: evidence from the second round effects of the global financial crisis on East Asia. Eurasian Econ Rev. Vol. 6, pp. 365-387.

Mahakud, J. & Dash, S.R. (2013). Impact of business cycle on bank capital buffers: Evidence from India. Economics, management and Financial Markets. Vol. 8, pp. 110-127.

Nasir, A.M., Ahmed, A. & Barkat, W. (2017). Operational performance and financial performance of Malaysia Airlines. A Research Journal of Commerce, Economics and Social Science. Vol. 11, pp. 34-40.

Nikoo, S.F. (2015). Impact of capital structure on banking performance: Evidence from Tehran stock exchange. International Research Journal of Applied and basic Sciences. Vol. 9, pp. 923-927.

Noreen, U., Alamdar, F. & Tariq, T. (2016). Capital buffer and bank risk: Emperical study of adjustment of Pakistani banks. International Journal of Economics and Financial Essues, pp. 1798-1806.

Novokmet, A.K. (2014). Cyclicality of bank capital buffers in South-Eastern Europe: endogenouse and exogenous aspects. Financial Theory and Practice. Vol. 39, pp. 139-169.

Pereira, J.A.M. & Saito, R. (2015). Coordination of capital buffer and risk profile under supervision of Central Bank. Revista Brasileira de Financas (Online), Rio de Janeiro. Vol. 13.

Raza, T., Tang, J., Khidmat, W.B. & Iqbal, F. (2019), Impact of Bank and Economic Determinants on Capital Buffer in Pakistan Banking Sector. Journal of Applied Finance & Banking. Vol. 9 No 2, 125-141.

Riaz, S., Liew, V.K. & Ab Rahim, R. (2019). The Impact of Business Cycle on Pakistani Banks Capital Buffer and Portfolio Risk. Romanian Journal of Economic Forecasting. Vol. XXII.

Sheikh, N.A. & Wang, Z. (2012). The impact of capital structure on performance an emperical study of non-financial listed firms in Pakistan. International Journal of Commerce and Management. Vol. 23, pp. 354-368.

Shim, J. (2013). Bank capital buffer and portfolio risk: The influence of business cycle and revenue diversification. Journal of Banking & Finance. Vol. 37, pp. 761-772.

Tasman, A., Fitra, H., Helmayunita, N., & Susanti, F. A. (2019). Capita Buffer in Indonesia: Do Adjustment Cost and Business Cycle Matter. International Conference on Economics, Education, Business and Accounting, Vol 2019, pp. 736-743.

Undang-Undang Republik Indonesia Nomor 10 Tahun 1998. Perubahan atas Undang-Undang Nomor 7 Tahun 1992 Tentang Perbankan. Lembaran Negara Republik Indonesia Tahun 1998 Nomor 182.

Zheng, C., Xu, T. & Liang, W. (2012). The Emperical research of banks’ capital buffer and risk adjustment decision making. China Finance Review International. Vol. 2, pp. 163-179.




DOI: http://dx.doi.org/10.25105/ber.v19i2.5702

Refbacks

  • There are currently no refbacks.


Copyright (c) 2019 Business and Entrepreneurial Review

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

_______________________________________________________________________________________

BUSINESS AND ENTREPRENEURIAL REVIEW (BER) : Graduate Program, 7th fl Building D, Universitas Trisakti.   Jl. Kiyai Tapa Grogol - Jakarta 11440, Phone : 6221-5663232 ext. 8327, 8322, Fax : 6221-5668640, email : ber_jurnal@trisakti.ac.id

----------------------------------------------------------------------------------------------------------------------------------------

Creative Commons License
BER Journal is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.


View My Stats