FAKTOR PENENTU NET INTEREST MARGIN PERBANKAN INDONESIA

Abstract

The objective of this study is to ana-lyze the determinant of net interest mar-gin in Indonesia using Dealer’s Model. By using OLS regression on Indonesian banking industry data series, it can be concluded that several factors such as business risk, credit risk, operational eficiency and loan performance signifi-cantly affect the net interest margin in Indonesian Banking. Unlike other study based on the same concept, this study fails to detect the relationship between market strucure and market power to-wards net interest margin. Therefore, based on the result, Bank Indonesia, as the Central Bank, should focus its poli-cies toward inefficiencies and credit risks reduction. Bank Indonesia should also be able to coordinate with the Econom-ics Minister to manage business risk, in order to push the Indonesian net interest margin for being able to achieve to its ideal level.