Interaction of the Effect of Capital and Liquidity on Loan Growth Bank in Indonesia

Abstract

This study aims to see the differences in the effect of capital and liquidity on both large banks, medium banks and small banks. Where this type of bank is divided based on the order of the total assets of each bank from the largest to the smallest. This study uses the Capital Adequacy Ratio (CAR) as an indicator of capital and the Loan To Deposit Ratio (LDR) as an indicator of liquidity. This study also involved 5 control variables, namely bank size, Non-Performing Loan Gross (Gross NPL), Allowance for Impairment Losses (CKPN) and net interest margin (Net Interest Margin or NIM). In conducting this research, researchers used a population of 46 banks that have been listed on the Indonesia Stock Exchange. Where the sample selected in this study uses several criteria with the purposive sampling method and there are as many as 24 banks that meet the criteria set by the researchers. Regarding data collection, the authors use secondary data in the form of bank quarterly reports, both attached to the bank's website and attached to OJK banking publication report. The results of the research that the researchers got were that only small banks had an influence on loan growth, where a one percent increase in small bank capital would increase the amount of loan growth. Regarding liquidity, both large banks, medium banks and small banks have a significant influence on loan growth. This means that if there is an increase in liquidity at the bank, the bank will experience an increase in loan growth or in other words when the bank is liquid, lending will increase.