THE INFLUENCE OF INFLATION, INTEREST RATE BANK

INDONESIA CERTIFICATES (SBI), THIRD PARTY FUNDS

(DPK), DAN CAPITAL ADEQUECY RATIO (CAR) TO LOANS
GRANTED ON GOVERMENT BANK

Taufik Hidayat
Faculty of Economics, Study Program of Management, State University of
Jakarta
Email: opik1188@yahoo.com
Dra. Umi Mardiyati, M.Si
Faculty of Economics, Study Program of Management, State University of
Jakarta
Email: umi.mardiyati@gmail.com
Agung Dharmawan Buchdadi, ST, MM
Faculty of Economics, Study Program of Management, State University of
Jakarta
Email: agungdharmawan@feunj.ac.id

Abstract
The purpose of this research are to get fact about influence independent
variable whish are inflation, interest rate Bank Indonesia Certificates (SBI) for a
month, Third Party Funds (DPK), dan Capital Adequecy Ratio (CAR) against
loans granted dependent variable. The analysis test by finding regression
equation double. The reach population in this research are government banks who
still operating on January 2003 June 2010. Based on the simultaneous testing
showed thatindependent variable has against for against loans granted on
goverment bank. Based on the simultaneous testing showed that inflation, Third
Party Funds (DPK), dan Capital Adequecy Ratio (CAR) have positive against and
interest rate Bank Indonesia Certificates (SBI) for a month has negative against
for independent variable. The result of determination coeficient test is 42,07%.
Means inflation, interest rate SBI for a month, third party funds, dan Capital
Adequecy Ratio (CAR) determinated 42,07% by loans granted as dependent
variable.
Key Words : Inflation, Bank Indonesia Certificates (SBI), Third Party Funds
(DPK), Capital Adequecy Ratio (CAR), Loans Granted

INTRODUCTION

Finance development in a country is highly dependent with dynamic

development and real contribution from banking sector. While banking sector is
collapse so national financial will string along. In other hand when national
financial was stagnated then banking sector will get the impact where is
intermediation function can not be walk expedity.
Bank is one of the financial institution that have important role of
economics in a country, as it turns to be center of economics effectivity. In the
broad sense, a bank can be considered as a heart from the complex financial
structure. As intermediary, the bank accumulate peoples money into deposit,
savings and giro form and then this fund will be distribute to publicinto loans and
credits form. Moreover, the bank can give more services like transfer, letter of
credit, guaranty bank, and the others. According from ownership, conventional
public bank in Indonesia divided into five groups which is Goverment Bank (bank
of property goverment), Private Bank ( foreign exchance and non foreign
exchange), Regional Development Bank (bank of property regional goverment),
Composite Bank (national private and foreign property), and Foreign Bank
(Siamat, 2005:47).
Loans granted is businnes activity that dominate funds allocation in the
bank. Therefore, the main source of bank income is come from loans credit
distribution activity in the form of interest income. This credit interest rate ferers
to BI rate. In determine of this interest rate, the bank have agency or committee
that named is ALCO (Asset Liabilities Committee).
Inflation impact will influence credits giving, particularly credit for
businness. More higher the rate of inflation the banking will be doing restriction
for against loans credit. This condition is conducted to cut the risk of pay failure.
The inflation rate is also closely related to the SBI interest rate movements.
Movement below the inflation rate of SBI owners of capital can make to avoid
these investment instruments. To that end, Bank Indonesia seeks to keep the
inflation rate does not exceed the rate of SBI. Bank Indonesia policy regarding the
SBI rate to be a reference for commercial banks in increasing or decreasing the
level of lending rates.

Source of funds is paramount for a bank to be able to increase the amount

of credit that will be distributed to the public. The banking sector in providing
credit requires the availability of financial resources. Availability of Third Party
Funds (TPF) are collected from the community is the most important source of
funding for operational activities of a bank and is a measure of success if the bank
is able to finance its operations from the source of these funds. Under the
regulations of Bank Indonesia. 5/21/PBI/2001 on capital adequacy for commercial
banks, that every bank must provide a minimum capital of 8% of Risk Weighted
Assets (RWA), which projected by ratio Capital Adequacy Ratio (CAR).

LITERATURE REVIEW
According to the Act - Act No.. 10 of 1998, banks are business entities that
raise funds from the public in the form of savings and channel them to the public
in the form of loans and or form - other forms in order to improve the standard of
living of the people. The main advantage of the banking business is based on
conventional principles derived from the difference between deposit rates given to
the depositary by borrowing or lending. The advantage of the difference in interest
is known as a spread based. More specifically functions as an agent of the bank
can trust, agent of development, and the agent of services (Kasmir, 2008).
Credit
Credit or financing may be money or a bill whose value is measured by
money, with the agreement between the bank and the client receiving the credit.
The credit agreement included the rights and obligations of each party, including a
period as well as interest set together. Similarly, the consequences of a problem if
the debtor reneges on a promise that has made an agreement together. Credit
transactions, among others, the presence of a particular desire of entrepreneurs
who lack capital to accelerate their business, so do credit transactions, in which
credit transactions based on mutual trust.
Inflation

Inflation is a value where the price level of goods and services in general
have increased. Inflation is a monetary one event which showed a tendency to
rising prices of goods in general, which means a decrease in the value of money.
Inflation is the rise in general prices of goods on an ongoing basis. The inflation
rate is one indicator that is used by economic actors to assess whether or not
economic conditions in a country.
In understanding the concept of inflation, price increases that occurred
were generally rising prices of goods on an ongoing basis over a period of time. In
the event of a price increase of goods that do not affect the price of other goods,
so prices are not rising in general, the incident was not called inflation. It is
different if the increase is fuel price, it affects the price of other goods, so in
general all products have all experienced price increases. If the increase was going
up and down again for a moment, it can not be said to inflation because price
increases are factored in inflation has a span of a month.
Interest Rate Bank Indonesia Certificates (SBI)
Bank Indonesia Certificates (SBI) is the bearer securities in Rupiah issued
by Bank Indonesia as a short-term debt instruments and sold with a discount. SBI
first published in 1970 with the aim of creating a money market instruments that
are only traded between banks. SBI is one of the mechanisms used by Bank
Indonesia to control the stability of exchange rate.
As one of the instruments OPT (Open Market Operations), SBI issued and
offered in an auction system. BI indirectly affect the interest rate on the money
market through the SBI by announcing Stop Out Rate (SOR), the interest rate
received by the Bank offers an interest rate of bidders. SOR is generally used as
an indicator of interest rates in money market transactions. SBI transaction is
based on the discount rate. The factors that influence the price of SBI itself is the
size of the discount rate and the number of days due SBI concerned.
According to PBI. 4/10/2002 Certificate of Bank Indonesia, SBIs, are securities in
rupiah currency issued by Bank Indonesia as a short-term debt instruments. SBI
issued by the Bank as one of operanti open market, activity in the money market
transactions conducted by the BI with other parties in the framework of monetary

control. The interest rate is determined by the market mechanism based auction
system. SBI is an instrument that offers a return that is competitive and free of
risk (risk free) failed to pay.
Third Party Funds (DPK)
Third Party Funds (TPF) is obtained from public funds, in the sense of
community as individuals, corporations, governments, households, cooperatives,
foundations, and others both in rupiah and foreign currency. Activities of the bank
after collecting funds from the public in the form of demand deposits, savings,
and deposit those funds are channeled back to communities in need. Activity
funds is also known as allocation of funds. The allocation of funds can be realized
in the form of a loan or better known as the credit. Bank lending is the most
important activity in generating profits. In obtaining funds from the public bank
can use three different types of deposits (accounts). Each type has its own
advantages so that the savings banks in the deal should be a good selection of
resources.
Capital Adequacy Ratio (CAR)
According to Bank Indonesia Regulation Number: 3/21/PBI/2001, banks
are required to provide a minimum capital of 8% of risk-weighted assets ratio is
expressed in the Capital Adequacy Ratio (CAR). CAR calculation is in principle
is that for every placement in a mengadung credit risk capital is to be provided a
certain percentage of money adjusted by the amount of such planting. This ratio is
also intended to ensure that if the bank suffered a loss of activity, the availability
of capital owned by the bank is able to replace those losses.
Capital consists of core capital and supplementary capital. Core capital
consists of paid-up capital and reserves additional capital consisting of an addition
and deduction factor. Core capital calculated by the deduction of goodwill.
Supplementary capital consists of fixed assets revaluation reserves, general
reserves Allowance (up 1.25% of RWA), capital loans, subordinated loans (up to
50% of core capital), and an increase in the value of the investments in the
portfolio of available for sale as high for 45%. While the RWA (Risk Weighted

Assets) consist of a balance sheet assets weighted according to levels of credit risk
inherent in the post and some off-balance sheet which is weighted according to the
level of inherent credit risk.
RWA is obtained by multiplying the nominal value with a weighted risk
assets. More liquid assets and the risk is 0 illiquid risk weight of 100, so the risk
ranged from 0-100%. But each bank has its own way of managing capital. If the
bank tends to choose a safe manner as channeled through the bank including SBI
risk averse or risk taker is by choosing to use their capital for something more
risky, such as credit. Credit is said to be risky because at any moment has the
potential to be bad debts and this will certainly affect the CAR. But the actual
decline in CAR is not a problem, all can still meet ketetuan set by the Bank of
International Settlements (BIS), which amounted to 8%.
FRAMEWORK
In this case the Corporation Bank lending is affected by several factors,
both external and internal factors. In this study the external factors are thought to
significantly influence the amount of credit is inflation and interest rates of Bank
Indonesia Certificates (SBI), while internal factors are thought to significantly
influence the amount of credit is a Third Party Funds (TPF) and Adequecy Capital
Ratio ( CAR). These four factors are also thought to influence simultaneously in
influencing the amount of lending at Bank Limited.
Movement below market expectations of inflation will make the owner to
avoid capital investment instruments. This will affect the amount of investment
credit disbursed Bank Limited. The inflation rate is also closely linked to
movements in interest rates of Bank Indonesia Certificates (SBI). Bank Indonesia
Certificates (SBI) issued by the Bank as one of the tools of Open Market
Operations (OMO), activity in the money market transactions conducted by the BI
with banks and other parties in the framework of monetary control. The interest
rate is determined by the market mechanism based auction system. SBI is an
instrument that offers a return that is competitive and free of risk (risk free) failed

to pay. SBI rates are too high to make banks prefer to place their funds in SBI
rather than channeling it for credit.
The main source of bank funding comes from the public or third party
funds (DPK) so morally bank should distribute it back to the community in the
form of credit. Bank lending is the most important activity in generating profits
that the amount of credit will be affected from the amount of funds collected from
the community. Capital adequacy levels with Capital Adequacy Ratio diproksikan
(CAR) has nothing to do with the credit because there are provisions required by
the monetary authorities on the issue of this capital. Thus lending by banks will be
affected by the level of capital adequacy of bank owned. Based on a literature
review of previous studies and confirmed by the research framework can be
formulated as follows:

Infl
ati
S
on
BI1
(X
D
(X
)
P
2)
C
K
A
(X
R
3)
(X
4)

Loan
Granted
(Y)

Figure 1: Framework for Thought

Source: Data processed by researchers

HYPOTHESIS
Based on earlier research conducted by Haryati (2009), indicates that
inflation is a significant positive effect on the growth of domestic bank credit but
did not affect foreign bank siginfikan the mixture. While the SBI rate is also

investigated by Bayu (2006) and Anggrahini (2005) had different results. In the
study Bayu (2006) with a sample of non BUSN-exchange showed that the SBI
negative effect on credit growth. While the research Anggrahini (2005) with a
sample of commercial banks showed that the SBI has a positive effect on bank
credit. Based on the results of these studies happen to different results between
studies conducted by Bayu (2006) and Anggrahini (2005).
Previous studies on the effect of growth in deposits with credit growth by
Haryati (2009) with a sample of national banks and foreign banks operating in
Indonesia, showed that the growth in deposits and a significant positive effect on
credit growth. While the research Setiyati (2007) by Bank Limited samples
showed that the deposits have negative and significant impact on bank lending.
Occur between different research studies conducted by Haryati (2009) and
Setiyati (2007).
Differences in the results of previous studies on the effects of CAR on
credit growth was also obtained from research conducted by Nyamiati (2009) and
Meydianawathi (2006). In the study Nyamiati (2009) with a sample of the
National Private Banks Foreign Exchange (BUSN-Foreign Exchange) showed
that the CAR is negative and significant effect on credit. While the research
Meydianawathi (2006) showed CAR has positive and significant impact on credit
supply working capital investment and commercial banks.
Based on the data and some relevant theory and research support, then
hHipotesis in this study are:
H1

Inflation has a positive effect on loans granted.

H2

Interest rate of Bank Indonesia Certificates (SBI) negatively affect on

loans granted.

H3

Third Party Funds (DPK) has a positive effect on loans granted.

H4

Capital Adequacy Ratio (CAR) has a positive effect on loans granted

H5

Variable inflation, Interest rate of Bank Indonesia Certificates (SBI),

DPK, and CAR simultaneous effect on loans granted.

METHODOLOGY

The research method used in this study is testing the hypothesis

(hypothesis testing). This type of study is a descriptive and verifikatif. The study
is called descriptive because this study started from the collected data, inventory
data, process data, and then presents the results are accompanied by interpretation
so as to obtain a clear picture of the studied subject. In addition the study included
research verifikatif for using while statement formulated in the form of
hypotheses to be tested empirically. This study aims to see the influence of the
relationship between the independent variables on the dependent variable using
multiple linear regression analysis. Statistics for testing the hypothesis in this
study using multiple linear regression method using the formula:

Y= a + b1 x 1 + b2 x 2 + b3 x 3 + b4 x 4 + e
Dalam hal ini,
Y
a
x1
x2
x3
x4
b1,b2,b3,b4
e

=
=
=
=
=
=
=
=

loan granted in period t

Constant of regression equation
Inflation in period t
Interest Rate SBI in period t
Third Party Funds (DPK) in period t
Capital Adequacy Ratio (CAR) in period t-1
regression coefficient
Standard error

EMPIRICAL RESULTS
Descriptive Statistics
Tabel 1 : Descriptive Statistics

Mean

Inflation
(%)

Interest Rate
SBI (%)

DPK
(Bilion Rp.)

CAR (%)

Loan Granted
(Bilion Rp.)

8.026111

8.879444

490833

19.33211

314514.2

Median

6.915

8.31

452189

20.21

270844.5

Maximum

18.38

12.75

783384

25.57

588755

Minimum

2.41

6.2

359504

12.77

148440

Std. Dev.

3.909838

1.909218

129985.8

3.330355

128529.2

Source : Data processed by Eviews6

Testing is done by performing regression on all independent variables, namely

inflation, interest rates of Bank Indonesia Certificates (SBI), the Third Party

Funds (TPF), and Adequecy Capital Ratio (CAR) on the dependent variable the
number of loans at Bank Limited. After going through the trials of classical
assumptions, data on the model of this study have a normal distribution. This
research model and has been free from multicollinearity, heteroscedasticity, and
autocorrelation so we get the best model for multiple linear regression equations
shown in table 2.
Tabel 2 : Summary of Regression Results
Dependent Variable: Y
Method: Least Squares
Date: 06/27/12 Time: 09:49
Sample: 1 90
Included observations: 90
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
X1
X2
X3
X4

2.473887
0.080386
-0.364575
0.436976
0.066359

1.088952
0.069206
0.148756
0.058790
0.052104

2.271806
1.161537
-2.450821
7.432861
1.273587

0.0256
0.2487
0.0163
0.0000
0.2063

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

0.420703
0.393442
1.439085
176.0321
-157.8930
15.43239
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

1.542444
1.847780
3.619845
3.758723
3.675849
1.889967

Source : Data processed by Eviews6

Based on the obtained regression equation that shows the effects of inflation,
interest rates SBI, DPK, and CAR to total loans at Bank Limited. Making multiple
linear regression equation can be done by interpreting the numbers in the value of
beta coefficient on the regression results table. The shape of the regression
equation is as follows:
Y = 2,47 + 0,080 X1 0,364 X2 + 0,436 X3 + 0,066 X4

CONCLUSION

10

Based on the simultaneous testing showed that the independent variables

have a simultaneous effect on the amount of lending at Bank Limited. Partially
based on testing that variable inflation, deposits, and CAR is positively affected,
while the variable rate SBI negarif effect of independent variables. Coefficient of
determination results showed that 42.07% of the variation of the Corporation
Bank lending can be explained by the variation of the four independent variables
while the rest is explained by causes outside the model.
Where in this study, Bank Deposits and the Corporation has a number and the
CAR are quite high, exceeding the minimum limit prescribed by Bank Indonesia.
Corporation Bank also needs to be more responsive to changes in inflation and
interest rates set by the Bank SBI Indonesia. If the interest rate set by Bank
Indonesia SBI Bank Limited decline is expected to respond by also lowering the
level of lending rates.
In suppressing the effects of rising inflation, Bank Limited should maximize
the collection of Third Party Funds (TPF) to provide an attractive rate so that the
efforts in collecting funds from society can be realized optimally. To maintain the
value of deposits can be made by an attractive reward programs, sales people and
service people are qualified, attractive deposit rates, and extensive service
network and easily accessible, in order to attract minatmasyarakat to save their
money. Meanwhile, to maintain a high enough value of CAR, the Bank requires
the Corporation to more optimal use of the usefulness of financial resources
(capital) owned by lending.
For further research are expected to further develop his research again, by
way of renewing the research period as well as adding more independent variables
that could explain the variation and the influence of the amount of lending.

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