ANALYSIS OF CHANGES IN SOCIETY RESPONSE TO BOND RATES ALTERATION ON BANK'S UTILITY FUNCTION

• Main Author: LASTYANA (NIM : 10108018); Pembimbing : Dr. Novriana Sumarti, YESSY
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/17634
• Institution: Institut Teknologi Bandung

Bank in conducting its business will be strongly influenced by economic conditions and the various measures taken by banks and monetary authorities in a country. From the bank's side as a business entity, the bank aims at maximizing profits acquired from the collection of public funds on deposit that will be allocated as loans to public funds, bonds, interbank loans, etc. On the other hand, Bank Indonesia as the financial institution authority expects all banks to control their liquidity level while trying to achieve maximum profits. In order to balance the interests of both parties, an utility function that can be represented as a benchmark assessment of liquidity level is formed. The greater the utility functions of a bank, the better the liquidity management of banks. Society response to the interest rates on bonds can affect the magnitude of the utility function obtained by the bank. This will affect the volume of bank deposits that would be obtained from public and the large volume of requests for bank loans that may affect the bank's utility function. <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> This thesis investigates how society response influuences the bank's utility function. The greater the society response to the interest rates on bonds in deposit their funds, the worse the utility functions of a bank. The greater the society response to the interest rates on bonds in borrowing funds, the better the utility functions of a bank.