Banking Performance Affects Working Capital Loans Growth: Evidence From The Indonesian Banking Industry

Abstract

This study aims to analyze the effect of third-party funds, non-performing loans, loan-to-deposit ratio, net interest margin, and operating-income-to-operating-expenses on the growth of working capital loans disbursement in the Indonesian banking industry. Making use of the purposive sampling technique, thirteen out of a population of forty six conventional commercial banks listed in the Indonesian Stock Exchange were selected as this study’s samples. Quantitative secondary data obtained from these banks’ annual reports of 2011-2019 were analyzed by use of the panel data regression method with a fixed effect approach. The results show that third-party funds, loan-to-deposit ratio, net interest margin, and operating-expenses-to-operating-income have a statistically significant positive effect on the growth of of working capital loans. Non-performing loans is shown to have a statistically non-significant effect on working capital loans growth.