INFLATION, INTEREST RATE, BI RATE, NPL AND LDR ON CREDIT DEMAND AND SUPPLY: SIMULTANEOUS MODELING

Abstract

This research was conducted to identify factors that influence the demand and supply of credit during the Covid-19 pandemic. This research uses a credit demand and supply model estimated with Two Stage Least Square (TSLS). The independent variables used in this research are inflation, credit interest rates, BI Rate, Non-Performing Loans (NPL) and Loan To Deposit Ratio (LDR). Meanwhile, the dependent variable is total credit. In the credit demand equation, the inflation variable has a positive and insignificant influence on total credit, interest rates have a negative and significant influence on total credit, the BI Rate has a positive and significant influence on total credit. In the credit supply equation, the interest rate and NPL variables have a negative and significant influence on total credit, the BI Rate has a positive and insignificant influence on total credit, and the LDR has a positive and significant influence on total credit.