THE IMPACT OF LOAN-TO-VALUE RATIO POLICY IMPLEMENTATION AND ADJUSTMENTS ON CONVENTIONAL BANK’S PERFORMANCE IN INDONESIA

• Main Author: Alfathan Tuba (NIM 19014099), Loudy
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/22920
• Institution: Institut Teknologi Bandung

ABSTRACT <br /> <br /> The aim of this study is to identify (1) the before and after impact of Loan-to-Value (LTV) <br /> <br /> ratio policy implementation on conventional bank performance in Indonesia, (2) the before <br /> <br /> and after impact of LTV ratio policy adjustments in 2013, 2015, and 2016 on conventional <br /> <br /> bank in Indonesia, and (3) the effectiveness and significance of LTV ratio policy in affecting <br /> <br /> conventional bank performance in Indonesia. The variables used as indicators of bank <br /> <br /> performance in this research are Non-Performing Loan Ratio (NPL) and Loan-to-Deposit <br /> <br /> Ratio (LDR), which align with Bank Indonesia perspective as macro prudential decision <br /> <br /> maker. The subjects of this research are all conventional banks registered in the financial <br /> <br /> statements of the Financial Services Authority (OJK) and Bank Indonesia. The data collection <br /> <br /> in this research is derived entirely from Indonesian Banking Statistics (SPI) which is released <br /> <br /> on the official OJK website on a monthly basis from January 2008 to December 2016. <br /> <br /> Furthermore, data analysis was performed using T-Test: Paired Two Sample for Means for <br /> <br /> both ratios with a total of 108 data for each ratio analysis. And overall, research results show <br /> <br /> that (1) LTV proven to be able to significantly reduce banking risk, specifically on <br /> <br /> commercial bank system, (2) proven to be able to significantly increase commercial bank <br /> <br /> industry LDR, while still maintaining ideal liquidity proportion, (3) proven to be able to <br /> <br /> significantly increase banking risk if the purpose is relaxation, and (4) it adjustment in 2013, <br /> <br /> 2015, and 2016 are not statistically effective in affecting bank performance. <br /> <br /> Keywords: Loan-to-Value Ratio Policy, Bank Performance, NPL, and LDR.