THE INFLUENCE OF MONETARY POLICY (BI RATE) ON PROFITABILITY OF COMMERCIAL BANKS IN INDONESIA
No Thumbnail Available
Date
2013-03-13
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Universitas Surabaya
Abstract
ABSTRACT
One of the monetary policy of the Central Bank Indonesia interest rate is called BI rate (Bank
Indonesia Rate), changes in the BI rate will affect the money market interest rates, deposit rates and
lending rates although the mechanism of monetary policy is in the process requires time (time lag).
BI rate effectively influence the performance of the bank. Determination of interest rates either by bank
management is one of the keys to success in obtaining bank profits (profitability by using ROA and NIM).
This study aims to: (1) analyze how the effects of changes in the BI rate to the level of bank profitability
(ROA and NIM), (2) How long does it take (time lag) changes effective BI rate will significantly influence
the level of profitability, and (3) what variables affect the profitability of the conventional banks.
Analytical techniques that will be used in this study is multiple regression is to obtain an overall picture of
the relationship and influence between the dependent and independent variables.
The object of research is the profitability of conventional commercial banks listed on the
Indonesia Stock Exchange since November 2005 (the year from the enactment of the BI rate) through
October 2012 using data times series monthly. Determination of the sample is using simple random
sampling. Methods of analysis using multiple regression analysis based on secondary data, and to
determine the accuracy of the model tested on some classical assumptions underlying the regression
models include the test for normality, multicolinearity, and autocorrelation heteroscedasticity.
BIRate has negative effect on ROA and showed a statistically significant number, but BI Rate did
not show a statistically significant rate by setting the standard error of 5% on NIM and has negative
direction. Influential BI Rate to ROA is happened with 1 month time lag, meanwhile BI Rate was not
having an effect on the NIM with 1 month time lag. Based on the semiāpartial correlation coefficients,
BIRate very great influence in determining of ROA ranks, meanwhile Operational Cost to Operational
Income (OCTOI) is great influence to determine of NIM, while BI Rate ranks last of the NIM
Keywords: BI Rate, Loan Rate, LDR, CAR, OCTOI, NPL, ROA and NIM
Description
Keywords
BI Rate, Loan Rate, LDR, CAR, NPL, NIM, OCTOI, ROA