Pamuji Gesang Raharjo
Bogor Agricultural University

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DETERMINANT OF CAPITAL RATIO: A PANEL DATA ANALYSIS ON STATE-OWNED BANKS IN INDONESIA Pamuji Gesang Raharjo; Dedi Budiman Hakim; Adler Haymans Manurung; Tubagus Nur Ahmad Maulana
Buletin Ekonomi Moneter dan Perbankan Vol 16 No 4 (2014)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | Full PDF (212.9 KB) | DOI: 10.21098/bemp.v16i4.19

Abstract

Capital has an important role in maintaining safety of banks and in order to create a sound banking system. Banks are required to have a sufficient amount of capital, both to support its business expansion as well as a buffer to prevent any unexpected loss that banks might face and absorb losses arising from a variety of risks. Eventhough consists of four banks, State owned banks in Indonesia are catalystor for the banking industry in Indonesia. The failure of state-owned banks can affect the stability of Indonesian banking system. This study aims to study and analyze determinants of capital ratio of state-owned banks. Several variables have been used in previous studies to be used a proxy. The study applied panel data regression model. The capital ratio of state-owned banks is affected by asset growth (LNSIZE), equity to total liabilities ratio (EQTL), non performing loan (NPL), interest rate risk (IRR), and operational cost to operational revenue ratio (BOPO) on a different level of significance.  Keywords: Capital structure, state-owned commercial banks, panel data JEL Classification: C23; G21; G32