IDEAS home Printed from https://ideas.repec.org/h/spr/advbcp/978-94-6463-400-6_65.html

Determinants of Private Investment In Indonesia: An Error Correction Model Approach

In: Proceedings of the 8th International Conference on Accounting, Management, and Economics (ICAME 2023)

Author

Listed:
  • Retno Fitrianti

    (Hasanuddin University)

  • Sri Undai Nurbayani

    (Hasanuddin University)

  • Nur Dwiana Sari Saudi

    (Hasanuddin University)

  • Fitriwati Djam’an

    (Hasanuddin University)

  • Muhammad Fadel Dwi Makmur

    (Hasanuddin University)

Abstract

The objective of this study is to examine the impact of independent variables on dependent variables over both the short and long term. The study examines interest rates, government spending, and risk as independent variables, with investment as the dependent variable. The analysis utilized time series data from 1996 to 2020 in Indonesia and using multiple regression models and an Error Correction Model (ECM). The findings indicated a strong favorable impact of both interest rates and government spending on investment. Conversely, risk factors have a considerable negative effect on investment in Indonesia both in the short and long run. The study examines the impact of interest rates on investment using Bank Indonesia’s interest rate data, which differs from the interest rates offered by commercial or private banks in Indonesia. The variable of government expenditure has a positive impact on investment, suggesting that government intervention is causing a crowding effect on investment. This means that investments in infrastructure improvements, health services, and education are increasing activities in the capital market. Ultimately, the risk factor has a detrimental impact on investment due to its perceived negative nature. an uncertainty variable that can suppress the amount of investment in Indonesia.

Suggested Citation

  • Retno Fitrianti & Sri Undai Nurbayani & Nur Dwiana Sari Saudi & Fitriwati Djam’an & Muhammad Fadel Dwi Makmur, 2024. "Determinants of Private Investment In Indonesia: An Error Correction Model Approach," Advances in Economics, Business and Management Research, in: Arianto Patunru & Mubariq Ahmad & Mursalim Nohong & Arifuddin Arifuddin & Anas Iswanto Anwar & Rakhm (ed.), Proceedings of the 8th International Conference on Accounting, Management, and Economics (ICAME 2023), pages 853-866, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-400-6_65
    DOI: 10.2991/978-94-6463-400-6_65
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:advbcp:978-94-6463-400-6_65. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.