Empirical Analysis of the Effects of Microeconomics and Macroeconomics Factors on Bank-risk Taking Behaviour Before and After Covid-19: Evidence from Regional Development Bank (BPD) in Indonesia

Vinka Amalia Hasta Barata and Taufik Faturohman

A chapter in The Finance-Innovation Nexus: Implications for Socio-Economic Development, 2024, vol. 34, pp 177-194 from Emerald Group Publishing Limited

Abstract: Regarding the crisis caused by the COVID-19 pandemic, regional development banks or Bank Pembangunan Daerah (BPD) are affected by the problem of non-performing loan (NPL) that plagues national banks. This study aims to find which microeconomic and macroeconomic factors significantly influence the regional development banks’ risk-taking behaviour and the effect COVID-19 pandemic on NPL. Microeconomic factors to be examined include credit growth, profitability, capitalisation, capital adequacy, bank size, credit volume, bank liquidity, and operational inefficiency. Macroeconomic factors to be examined include regional economic growth, deposit density (DD), deposits per branch (DB), and specialisation index (SI). This study employs a fixed effect panel data model with robust standard errors. The findings show evidence that credit volume is the only microeconomic factor that significantly influences regional development banks’ risk-taking behaviour. Meanwhile, DD, DB, and SI are the macroeconomic factors that significantly influence regional development banks’ risk-taking behaviour. The effects of the COVID-19 pandemic significantly influence regional development banks’ risk-taking behaviour.

Keywords: Non-performing loan; regional development bank; bank risk-taking behaviour; COVID-19; Indonesia; G21; G28; C33 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:isetez:s1571-038620240000034014

DOI: 10.1108/S1571-038620240000034014

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