CO-MOVEMENT BETWEEN BANK LOAN GROWTH AND ECONOMIC GROWTH IN INDONESIA USING WAVELET COHERENCE ANALYSIS

Aditya Wiguna, Viverita

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

This study investigates the co-movement between bank loan growth and economic growth in Indonesia from 2010 to 2020 using the Wavelet Coherence Analysis. The comovements are divided into three categories, i.e., bank ownership type, credit types, and bank size classification based on the Indonesian Financial Services Authority (OJK), referred to as the BUKU. This study shows that economic growth precedes bank loan growth in Indonesia between 2010-2020. Meanwhile, state-owned banks show the highest correlation between economic growth and loan growth among different types of bank ownership. In contrast, foreign-owned banks' loan growth shows a low correlation to economic growth. We also find that working capital loan growth has the highest correlation to economic growth than other loan types. Finally, this study reveals that medium-size banks (classified in BUKU 3) loan growth has the highest correlation to Indonesia's economic growth. Additionally, banks' loan growth in small banks (classified in BUKU 1 & 2) and large banks (classified in BUKU 4) shows fewer correlations. By discovering different co-movements between economic growth and loan growth of different bank ownership types, bank size groups, and loan types, regulators are expected to make valid policies to improve Indonesia's economic growth.
Original languageEnglish
Title of host publicationProceedings of the 7th Annual ECOFI Symposium (AES2021)
Pages1-10
Number of pages10
Publication statusPublished - Jul 2021

Keywords

  • Bank Loan Growth
  • Economic Growth
  • Wavelet Analysis
  • Bank Size
  • Credit Decomposition

Fingerprint

Dive into the research topics of 'CO-MOVEMENT BETWEEN BANK LOAN GROWTH AND ECONOMIC GROWTH IN INDONESIA USING WAVELET COHERENCE ANALYSIS'. Together they form a unique fingerprint.

Cite this