DETERMINANT OF CAPITAL RATIO: A PANEL DATA ANALYSIS ON STATE-OWNED BANKS IN INDONESIA

Authors

Pamuji Gesang Raharjo, Bogor Agricultural University
Dedi Budiman Hakim, Bogor Agricultural University
Adler Haymans Manurung, Bogor Agricultural University
Tubagus Nur Ahmad Maulana, Bogor Agricultural University

Document Type

Article

Abstract

Capital plays important role to support the operational of the banks and to create a sound banking system in aggregate. For this reason, the banks are required to have a sufficient amount of capital, both to support its business expansion as well as a buffer to prevent and to absorb any unexpected losses. This paper analyzes determinants of capital ratio of the state-owned banks in Indonesia. Using panel data regression model, the result shows that the capital ratio of these state-owned banks is affected by the size of the bank, the bank’s leverage, the quality of management, and the interest rate risk. Contrary to the existing literatures, this paper does not support the effect of management capability to generate income on the bank’s capital ratio. Keywords: Capital structure, state-owned banks, panel estimation.JEL Classification: C23, G21, G32

Recommended Citation

Raharjo, Pamuji Gesang; Hakim, Dedi Budiman; Manurung, Adler Haymans; and Maulana, Tubagus Nur Ahmad (2014) "DETERMINANT OF CAPITAL RATIO: A PANEL DATA ANALYSIS ON STATE-OWNED BANKS IN INDONESIA," Bulletin of Monetary Economics and Banking: Vol. 16: No. 4, Article 2.
DOI: https://doi.org/10.21098/bemp.v16i4.451
Available at: https://bulletin.bmeb-bi.org/bmeb/vol16/iss4/2

First Page

369

Last Page

386

Creative Commons License

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

Country

Indonesia

Affiliation

Bogor Agricultural University