Macroeconomic and Bank-Specific Determinants Of Loan Loss Provisioning In Indonesia  

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Suhartono

Jenis: Article from Journal - ilmiah nasional - terakreditasi DIKTI
Dalam koleksi: Journal of Economics, Business, & Accountancy: ventura vol. 15 no. 3 (Dec. 2012), page 359-372 .
Topik: Loan Loss Provision; Credit Risk; Poor Management Hypothesis; Procyclicality
Fulltext: 107-385-1-SM_3_dv.pdf (115.11KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: VV5.9 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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This paper used Generalized-Linear Model (GLM) with the exposure time to examine the determinants of credit loss provisions in Indonesia's banking sector. Ttie reseatvh w as motivated by the hypothesis that both macro economic \wiables and bank - specific Itave an effect on the quality of loans and loan loss provisions to cover risks. Vie results showed that loan losses could be explained primarily by a particular bank and macro economic variables. On asset size, the study found a positive relationship between the size of assets and loan loss provisions indicating that there is no benefit for the laige banks of their managerial and technological adv antages. Well-capitalized bank with a negative impact on loan loss provisions, the bank also show ed that the capitalized ones take less credit risk. It appeals clear that inefficient banks to risk further demonstrate the validity of the hypothesis of poor management. Using the profitability/Return On Average Assets (ROAA), it was found that there is a negative relationship implying that profitable bank save lower credit risk and also support the hypothesis that good management to take the risk is lower. On the impact of the pice index, it was found negative showing higher inflation reduces loan loss provisions. In terms of economic growtlt/Growlh Development (GD), the /esitlts provide fitrther evidence that economic growlh /educes ctedit risk and that this providesfurther support ofprocyclicality in ciedit markets.

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