Factors Affecting Lending to the Three Largest Lenders Bank in Indonesia

Abstract

The role and strategic function of banks in all business sectors can be seen in two important activities, namely collecting money or savings or deposits and distributing money in the form of loans. The purpose of this study is to analyze the effect of CAR, NPL, third-party funds, BI rate, inflation and GDP on general lending and small business loans. The data used are panel data from three banks, namely BRI, Bank Mandiri and BCA in the period 2008-2018. Panel regression model is used in this study. The results of the three models that reflect small business loans and total lending, produce significant NPL variables and negatively affect total and small business loans. CAR has a significant and positive effect, third-party fund has a significant and positive effect, the BI rate has a significant positive effect, inflation has a significant negative effect and GDP has a significant positive effect. The results in the regression model indicate that bank management must pay attention to the movement of variable NPL, third-party funds, and GDP on general lending and the movement of variable NPL, third-party funds, and BI rate on small business loans because it will affect lending to the community. From the regression model shows that these variables, except CAR and Inflation, affect general lending and small business loans.