Counter-Cyclical Capital Buffer and Regional Development Bank Profitability: An Empirical Study in Indonesia

• 발행기관: 한국유통과학회
• 저자명: Sri ANDAIYANI Ariodillah HIDAYAT Syaipan DJAMBAK Ichsan HAMIDI
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 8 No.5, 829~837쪽, 전체 9쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2021.05.30

영문 초록

The study investigates the impact of the Counter-Cyclical Buffer Policy (CCB) on regional development bank profitability in Sumatra, Indonesia. CCB requires banks to hold capital at times when credit is growing rapidly so that the buffer can be reduced if the financial cycle turns down or the economic and financial environment becomes substantially worse. This study employs time series data of regional development banks (RDBs) in Sumatra Island, Indonesia. The methodology applied in this study is a panel dynamic model with Generalized Methods of Moments (GMM). The results show that increasing capital through the implementation of CCB did not have a significant effect on RDBs’ profitability. The findings of this study suggest that the activation and implementation of CCB lead to an increase in the amount and cost of loans to companies but do not affect the profitability of RDBs. The value of a Non-Performing Loan (NPL) proved to have a negative and significant effect on bank profitability. The CCB policy aims to overcome the pro-cyclicality of credit growth and improve bank resilience through increased capital which is expected to reduce excessive credit growth as a source of systemic risk. This causes a lack of lending to the community so that the profits obtained by the bank decrease.

목차

1. Introduction

2. Literature Review

3. Research Methods and Materials

4. Results and Discussion

5. Conclusion

키워드

Capital Buffer Bank Profitability ROA Monetary Policy Panel Dynamic Regression