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Avoiding Risk In Working Capital Credit Distribution In Indonesia

Author

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  • Aloysius Deno Hervino

Abstract

This research analyzes risk avoidance behaviour of banking institutions in distributing working capital loan in Indonesia. Using Autoregressive Distributed Lag Error Correction Model, this paper uncovers three findings. First, in the short run, risk avoidance in working capital loan distribution depends on inter-call banking money market and Sertifikat Bank Indonesia. Second, following banking regulation after 1997 crisis, banks have become more careful in distributing credits, with SBI as a substitution instrument and inter-call banking money market as a complement instrument to spread the risk. Third, all explanatory variables take an average of 6 days or 1 week to influence bank’s risk avoidance behaviour.Keywords: Risk avoidance, working capital distribution, banking institutions JEL classification numbers: C32, C52, D81, E51

Suggested Citation

  • Aloysius Deno Hervino, 2011. "Avoiding Risk In Working Capital Credit Distribution In Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 3(2), pages 199-210.
    • Handle: RePEc:uii:journl:v:3:y:2011:i:2:p:199-210:id:2331
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    File URL: https://journal.uii.ac.id/JEP/article/view/2331/2130
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    More about this item

    Keywords

    risk avoidance; working capital distribution; banking institutions jel classification numbers: c32; c52; d81; e51;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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