Title:
BANKS SECTOR STABILITY RESPONSE TO MACROECONOMIC SHOCK AND BANK FUNDAMENTAL FACTORS: EVIDENCE FROM INDONESIA

Authors:
Ghozali Maski, Karina Jayadiadha, Luthfi Wahyu Hutama, Indonesia

Abstract:

Banks is an important financial institution, where banks is a pillar in the Indonesian economy. Banks has the main task of being a financial intermediary institution. The magnitude of the role of banks in the financial sector can be seen from the composition of the assets of financial institutions. Banks dominate the total assets of financial institutions. For this reason, it is important for the government and related institutions to maintain banks security. If the condition of a bank is healthy, it will create banks resilience in the face of monetary shocks that can shake Indonesia. But there are factors that can affect banks, namely internal and external factors. Internal factors can be seen from banks fundamentals, while external factors can be seen from Indonesia's macroeconomics. The purpose of this research is to find out and analyze the influence of fundamental factors or macroeconomic factors on the goals of banks in Indonesia. The analytical method used in this study is the Partial Adjustment Model (PAM). The data used are data on inflation, bi rate, rupiah exchange rate, and financial statements for each bank. From the analysis results show that the Rupiah Exchange Rate, CAR, and NPL have a significant effect on banks, while Inflation, Bi Rate, and NIM have no significant effect on banks.