CAPITAL ADEQUACY RATIO IN PRIVATE BANKING SECTOR, ANIMPLEMENTATION OF CAPITAL STRUCTURE

• Main Author: Anastasia (NIM 19004109), Annisa
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/5752
• Institution: Institut Teknologi Bandung

ABSTRACT: <br /> <br /> <br /> <br /> Capital is a vital factor in company to finance its operational activities that gain more profit. Many articles explain about capital structure, but most of them exclude for banks and other financial institutions. The understanding about this issue is very important to avoid the bank getting bankrupt. <br /> <br /> <br /> <br /> As an intermediary institution, bank has primary source of funding their capital by debt (more than 80percent). Greater amount of debt in funding their capital means more responsibilities for firm to manage its debt. There are two groups of private banking sectors based on the ownership in each bank: local banks and international banks. <br /> <br /> <br /> <br /> Local Private banking sector has higher rate of debt to equity ratio than international private banking sectors. The study also concludes that debt to equity ratio effecting 71percent of amount in capital adequacy ratio and debt to equity ratio has negative relation (comparable-inversed) with debt to equity ratio. International private banking sector has higher ratio on capital adequacy ratio compared with local private banking sector. <br /> <br /> <br /> <br /> In the last chapter of this study also determine the recommendation for next study: to calculate the optimum capital structure for each bank and try to measure other fourth categories of banks growth.