Adirizal Faruqinata, - and Wisnu Wibowo, - (2020) The Effect of Banking Credit Growth and Purchase of Securities Growth on Banking Stability in Indonesia. International Journal of Innovation, Creativity and Change, 13 (8). pp. 1371-1395. ISSN 2201-1315, eISSN: 2201-1323

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Abstract

This study aims to analyse the impact of banking fund distribution activities, banking credit and purchase of securities in October 2014 to March 2018. This study uses the Vector Error Correction Model (VECM) method. In this study the effect of banking fund distribution activities will be related to the banking stability index. The estimation results of the VECM method show that variables credit growth have negative effect and the purchase of bank securities have a positive effect on the banking stability index. The higher the banking stability index shows the deteriorating condition of banking stability. Therefore the higher the rate of credit growth will make banking stability better and the purchase of securities will further worsen the condition of banking stability.

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