The Importance of Third Party Funds

Oct 13, 2025 by magicalceylontours.com 67 views

The Effect of Third Party Funds on Credit Volumes on Banking Companies on the Indonesia Stock Exchange: An Empirical Study

Introduction

The banking industry plays a crucial role in the economic growth of a country, and the Indonesia Stock Exchange (IDX) is no exception. Banking companies listed on the IDX are responsible for channeling credit to the real sector, which in turn stimulates economic growth. However, the volume of credit provided by these banks is influenced by various factors, including third party funds. This study aims to reveal the effect of third party funds on credit volume in banking companies listed on the IDX.

Literature Review

Third party funds, consisting of Giro Deposits (X1), savings deposits (X2), and time deposits (X3), are used as independent variables, while credit volumes become dependent variables. The literature review reveals that third party funds are the main source of funding for banks, and their existence allows banks to distribute credit and carry out its intermediary function. Increasing the volume of third party funds can increase the ability of banks to channel credit and encourage economic growth.

Methodology

This study uses associative methods with combined data (pooling data) which is a combination of cross section and time series data, obtained from the annual report of 28 banks registered on the IDX during the 2007-2009 period. The analysis method used is multiple linear regression, T test, and F test. T test is used to analyze the partial effect of independent variables on the dependent variable, while the F test is used to analyze the simultaneous effects of independent variables on the dependent variable.

Results

The results showed that giro deposits, savings deposits, and time deposits have positive and significant influence on credit volume. This can be seen from the value of t arithmetic which is greater than the value of T table (2,936> 2,000) with a significance level of 0.004 (smaller than α = 0.05) for current deposit, 4,226> 2,000 with a significance level of 0.000 (smaller than α = 0.05) For savings deposits, and 5,597> 2,000 with a significance level of 0.000 (smaller than α = 0.05) for time deposits. The F test results show that F count is greater than F table (444,515> 2.76) with a significance level of 0.000 (smaller than 0.05). From the results of this analysis, it can be concluded that third party funds have a significant simultaneous effect on the volume of credit in banking companies on the IDX.

Deeper Analysis

The results of this study have several important implications for the banking industry in Indonesia. First, banks need to continue to improve the strategy of collecting third party funds to encourage the growth of their credit volume. Increased third party funds are directly directly proportional to the increase in the ability of banks in channeling credit to the real sector.

Second, this study shows that the three types of deposits have a significant effect on credit volume. This indicates that banks need to pay attention to the right strategy in managing each type of deposit, both in terms of interest offered and in terms of target customer segments.

The Importance of Third Party Funds

Third party funds are the main source of funding for banks. The existence of third -party funds allows banks to distribute credit and carry out its intermediary function. Increasing the volume of third party funds can increase the ability of banks to channel credit and encourage economic growth.

Recommendation

This study suggests that banks in Indonesia do several things to increase the volume of third party funds, including:

Improving the quality of banking services to attract new customers and maintain existing customers.
Offering innovative products and services and according to customer needs.
Increase operational efficiency to reduce operational costs and increase bank profitability.
Strengthening the risk management system to minimize potential losses and maintain customer confidence.

Conclusion

The results of this study indicate that third party funds have a positive and significant influence on the volume of credit in banking companies on the IDX. Banks need to pay attention to the right strategy in managing each type of deposit to increase the volume of third party funds and encourage the growth of credit volume.

Limitation of the Study

This study has several limitations. First, the study only focuses on the effect of third party funds on credit volume in banking companies listed on the IDX. Second, the study only uses data from 28 banks registered on the IDX during the 2007-2009 period. Third, the study only uses multiple linear regression, T test, and F test as analysis methods.

Future Research

This study suggests several directions for future research. First, future research can focus on the effect of third party funds on credit volume in banking companies listed on other stock exchanges. Second, future research can use data from other periods to see if the results of this study are consistent. Third, future research can use other analysis methods to see if the results of this study are robust.

References

[1] Indonesia Stock Exchange. (2020). Annual Report 2020.
[2] Bank Indonesia. (2020). Monetary Policy Report 2020.
[3] World Bank. (2020). World Development Indicators 2020.

Note: The references provided are fictional and for demonstration purposes only.
Frequently Asked Questions (FAQs) about the Effect of Third Party Funds on Credit Volumes on Banking Companies on the Indonesia Stock Exchange

Q: What is the main objective of this study?

A: The main objective of this study is to reveal the effect of third party funds on credit volume in banking companies listed on the Indonesia Stock Exchange (IDX).

Q: What are third party funds?

A: Third party funds are the main source of funding for banks, consisting of Giro Deposits (X1), savings deposits (X2), and time deposits (X3).

Q: What is the significance of third party funds in the banking industry?

A: Third party funds allow banks to distribute credit and carry out its intermediary function, increasing the ability of banks to channel credit and encourage economic growth.

Q: What are the implications of this study for the banking industry in Indonesia?

A: The results of this study have several important implications for the banking industry in Indonesia, including the need for banks to continue to improve the strategy of collecting third party funds to encourage the growth of their credit volume.

Q: What are the recommendations of this study for banks in Indonesia?

A: This study suggests that banks in Indonesia do several things to increase the volume of third party funds, including improving the quality of banking services, offering innovative products and services, increasing operational efficiency, and strengthening the risk management system.

Q: What are the limitations of this study?

A: This study has several limitations, including the focus on the effect of third party funds on credit volume in banking companies listed on the IDX, the use of data from only 28 banks registered on the IDX during the 2007-2009 period, and the use of multiple linear regression, T test, and F test as analysis methods.

Q: What are the directions for future research suggested by this study?

A: This study suggests several directions for future research, including the effect of third party funds on credit volume in banking companies listed on other stock exchanges, the use of data from other periods, and the use of other analysis methods.

Q: What are the implications of this study for policymakers and regulators?

A: The results of this study have several important implications for policymakers and regulators, including the need to create a favorable business environment for banks to collect third party funds and encourage the growth of their credit volume.

Q: What are the implications of this study for the Indonesian economy?

A: The results of this study have several important implications for the Indonesian economy, including the potential for increased economic growth and development through the expansion of credit to the real sector.

Q: What are the implications of this study for the banking industry in Indonesia?

A: The results of this study have several important implications for the banking industry in Indonesia, including the need for banks to pay attention to the right strategy in managing each type of deposit to increase the volume of third party funds and encourage the growth of credit volume.

Q: What are the implications of this study for the financial sector in Indonesia?

A: The results of this study have several important implications for the financial sector in Indonesia, including the need for the financial sector to support the growth of the real sector through the expansion of credit.

Q: What are the implications of this study for the Indonesian government?

A: The results of this study have several important implications for the Indonesian government, including the need to create a favorable business environment for banks to collect third party funds and encourage the growth of their credit volume.

Q: What are the implications of this study for the international community?

A: The results of this study have several important implications for the international community, including the potential for increased economic growth and development through the expansion of credit to the real sector in Indonesia.

Note: The questions and answers provided are fictional and for demonstration purposes only.