The Influence of Inflation Rate, Exchange Rate, Corruption Control, and Political Stability to Indonesian Government Bond Yield

Abstract

As a developing country that still has to develop in all fields and to maintain its economic development, the Indonesian government requires significant funds for development. To fulfill the lack of funds obtained from the tax, the Indonesian government sells bonds. Indonesia's 10-year government bonds are known as Surat Utang Negara (or abbreviated as SUN). This study aims to confirm whether the inflation rate, exchange rate, political stability, and corruption control affect the yield of SUN. The research uses descriptive methods and explanatory studies with secondary data based on systematic sampling of periods chosen from January 2013 to December 2019. Multivariate regression equation models were used with a significance level of 5% for the t-test. The conclusions are: partially and simultaneously inflation rate, exchange rate, control corruption, and political stability have a significant effect on the Indonesian Government Bond. This research found that deteriorating political stability and control corruption would cause government bond yields to increase

Determinants of Political Stability to Support Foreign Investment in Indonesia

“…This is in line with a study in the Middle East that states that political stability is essential for Yemen's future economic growth (Musibah et al, 2015). The study results in sub-Saharan Africa even added another factor besides macroeconomics and political stability needed to attract foreign investment, which is institutional credibility (Cleeve, 2012;Tjandrasa et al, 2020). Research conducted in Indonesia also concluded that foreign investors are very sensitive to political conditions (Tjandrasa, 2019).…”

“…One of the factors that are often considered from a particular country or region is the political development in the country because multinational companies face a great risk stemming from the uncertainty of the political situation in the destination country. Commonwealth Bank's Head of Wealth Management &Client Growth, Ivan Jaya, said Indonesia was a global investor's leading investment destination but hoped for stable Indonesian political conditions (Wuryasti, 2019;Tjandrasa et al, 2020). Associate Director of Colliers Inter-national Indonesia, Ferry Salanto, said many investors were delaying their investments ahead of the general election.…”