ANALYSIS OF FACTORS INFLUENCING FOREIGN OWNERSHIP IN GOVERNMENT BONDS INDONESIA

• Main Author: Aprilia Wati (19015170), Utami
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/31422
• Institution: Institut Teknologi Bandung

Indonesia is using a budget deficit policy in drafting a budget. The budget deficit is policy where the government spending is planned greater than government revenue. The purpose of implementing this policy to fulfill the welfare of the people. To cover the deficit budget, government can issue the bank loans, foreign loans, or issuing bonds. In Indonesia Government Bond, there are not only local investor but also foreign investor. In 2017, the proportion of foreign ownership in Indonesia Government bonds reached 39.25%. Compared with other developing countries in ASEAN, Indonesia is highest in proportion of foreign ownership in the local currency government bond. Foreign investor can help the liquidity of government bond increase and make the government bonds market efficiency will be going well. Moreover, Foreign ownership also make the economic of a country become healthier and improves. However, higher proportion of foreign ownership in government bond make the failure risk and market risk also higher. The foreign investor not only sensitive with the local economic factor, but also they are sensitive with global sentiment. The most critical things are government, and investors should able to determine what factors affecting foreign ownership in Indonesia Government bonds that come from internal and external and also the correlation each variable. Independent variables of this research divided into three types there are internal variables, external variables, and combine variables. The internal factors consists of Inflation rate, exchange rate United States Dollar-Indonesia Rupiah, transaction volume, and 10th government bond yield. The external factor consists of exchange rate United States Dollar-Malaysia Ringgit, 10th Malaysia government bond yield, exchange rate Unted States Dollars-Thailand Bath, 10th Thailand government bond yield, and Fed Rate. The combine factor consists of internal factors and external factors. This research is use secondary data and the analytical method used is descriptive quantitative by using OLS regression method. <br /> <br /> The study result showed that using internal factors, all independent variables is significantly affecting foreign ownership in Indonesia Government bond. Inflation rate and transaction volume positivelly affecting the foreign ownership in Indonesia government bonds. Exchange rate USD-IDR and 10th government bond yield negativelly affecting the foreign ownership in Indonesia government bonds. Using external factors, the exchange rate USD-MYR and fed rate significantly affecting foreign ownership in government bond Indonesia with negative correlation. And Using combine factors, just internal factors significantly affecting foreign ownership in Indonesia government bond.