The effect of the government bond value on the intermediary function of banks in the capital market of Indonesia
Open Access
- 7 October 2020
- journal article
- Published by LLC CPC Business Perspectives in Banks and Bank Systems
- Vol. 15 (3), 199-206
- https://doi.org/10.21511/bbs.15(3).2020.17
Abstract
The distribution of funds becomes the identity and function of banks. By performing this function well, the banks can get profit to survive. One of the considered factors affecting this channeling function is the issuance of government bonds to finance the state budget, which may be harmful to this bank channeling function. Therefore, to prove this situation, it is necessary to check a causal relationship between the government bond value and the bank intermediary function through this study, adding bank size and loans as a control variable. This study utilizes the banks listed on the capital market of Indonesia as the population. Furthermore, the Slovin formula and a simple random sampling method are employed to determine the number of banks to be the samples and take them. Also, the regression model with pooled data and the t-statistic test are used to estimate its coefficients and examine the proposed hypotheses, respectively. Overall, this study demonstrates that the government bond value positively affects the bank intermediary function. This indicates that the crowding-out does not exist. By this evidence, the government does not need to worry because this debt does not disturb the bank function to deliver the credit to society. Likewise, bank size and bad loans have a positive impact on this function. Thus, banks must be able to diversify risks among their assets and restructure bad loans when performing this function.Keywords
This publication has 13 references indexed in Scilit:
- Determinants of Liquidity in Commercial Banks of NepalInternational Journal of Economics and Management Studies, 2019
- Factors Affecting Liquidity of Banks: Empirical Evidence from the Banking Sector of PakistanColombo Business Journal, 2018
- Uji Empirik Crowding Out Surat Utang Pemerintah dan Korporasi di Pasar Modal IndonesiaJurnal Ekonomi Kuantitatif Terapan, 2018
- Analisis Fungsi Intermediasi Perbankan Indonesia (Studi Kasus Bank Umum Konvensional yang Tercatat di BEI Periode 2012-2016)Jurnal Inspirasi Bisnis dan Manajemen, 2017
- Determinants of Credit Growth: The Case of MontenegroJournal of Central Banking Theory and Practice, 2016
- The Impact of Non-performing Loans on Bank Lending Behavior: Evidence from the Italian Banking SectorEurasian Journal of Business and Economics, 2015
- Factors Affecting the Bank Credit: An Empirical Study on the Jordanian Commercial BanksInternational Journal of Economics and Finance, 2015
- Does Government Debt Affect Bank Credit?International Finance, 2013
- The Effect of the Domestic Debt on the Financial Development: A Case Study for TurkeyInternational Journal of Economics and Finance, 2013
- Bank size and lending relationships in JapanJournal of the Japanese and International Economies, 2008