Analysis on Fundamental of Macroeconomy Factors on Banking Performance and its Implications to Third Party Funds: A Case Study of Indonesia

Abstract

This study aimed to describe fundamental of macroeconomy, performance of banking and third party funds, analyze impact of fundamental of macroeconomy on bank performance, analyze effect of bank performance to deposit, analyze impact of fundamental of macroeconomy to deposit also analyze effect of fundamental of macroeconomy of third party funds through banking performance. The type of this research is descriptive explanatory that describe causality through hypothesis testing. This study uses 4 banks for 11 years (series) i.e. 2004 to 2014, with combined model of data obtained as many as 132. The analysis technique used is descriptive analysis and Analysis of Structural Equation Modeling (SEM). The results showed that fundamental of macroeconomy affect bank performance; it does show that every event relating to inflation and BI rate in the real sector will affect banks' performance. Performance of banking industry affects third-party funds. In conditions, interest rates rise, it will suppress growth of third party funds (including assets) of banks, and vice versa if interest rates experienced a declining trend, bank deposits will increase. Fundamental of macroeconomy affect third-party funds.