Contribution of conventional bank lending for agricultural sector in Indonesia

This study examines the determinant contribution of conventional bank lending for the agricultural sector in Indonesia. The analysis method used in this research is the Vector Correction Model (VECM). The results showed that in the short term, there was no significant effect of the Non-Performing Loan (LogNPL), GDP of Agricultural Sector (LogPDB), and Agricultural Sector Credit Interest Rates (SBK). However, there is an effect of the LogNPL and LogPDB on the conventional bank lending for the agricultural sector in the long term. The LogNPL has a significant positive effect on the contribution of conventional bank lending to the agricultural sector. While the LogPDB has a significant negative effect on the contribution of conventional bank lending for the agricultural sector. The Impulse Response Function (IRF) analysis results show that shocks to the LogNPL respond negatively in the long run, shocks to the LogPDB respond positively in the long run, and shocks to the SBK respond negatively in the long run by conventional bank lending for the agricultural sector. Through the analysis of FEVD (Forecast Error Variance Decomposition), it is known that the biggest contribution to conventional bank lending for the agricultural sector is agricultural credit and GDP.

Abstract licence: CC BY

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