THE ANALYSIS OF CHANGES IN SOCIETY RESPONSE TO DEPOSIT AND LOAN RATES UPON MINIMUM RESERVE REQUIREMENT

• Main Author: SIDDIQA (NIM : 10108014); Pembimbing : Dr. Novriana Sumarti, NADYA
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/16640
• Institution: Institut Teknologi Bandung

A bank is a financial institution that is essential to a country's economy, including Indonesia. According to Undang-undang Negara Republik Indonesia Nomor 10 Tahun 1998, a bank is a business entity which collects funds from the public in the form of deposits and channelled to the public in the form of credit and/or other forms to better the people welfare. <br /> <br /> <br /> <br /> <br /> <br /> <br /> Functionally, there are two types of banks; commercial banks and rural banks. These banks perform their own duties determined by the policies of the financial authority in their country. In Indonesia, this financial authority institution is known as Bank Indonesia, whose job is to achieve and maintain the currency stability. Thus, all the banks in Indonesia are obliged with every regulation stated by Bank Indonesia. One of Bank Indonesia regulations is called Minimum Reserve Requirement (MRR) which aims at controlling the inflation rates that may lead to an unstable monetary condition. The amount of MRR a bank must hold is affected by the bank rates and the value of Loan to Deposit Ratio. These effects could be observed by how people react to the bank rates alteration. <br /> <br /> <br /> <br /> <br /> <br /> <br /> This thesis shows that the more sensitive people are to loan and deposit rates, the bigger amount of MRR that must be stored in Bank Indonesia.