• The Journal of Asian Finance, Economics and Business
• /
• v.8 no.7
• /
• pp.31-42
• /
• 2021

This study aims to determine the relation between the real sector and the financial sector in underdeveloped areas in Nusa Tenggara, Indonesia. To facilitate understanding of these linkages, researchers use the logic of credit channel mechanism of monetary policy, financial intermediation, as well as supply leading and demand following theories. The research variables include economic growth, inflation, liquidity, and NPL at the provincial level, with a data sample from 2008 to 2019. This research uses VAR/VECM as the analysis tools. The findings of the long-term analysis in East Nusa Tenggara show there is a phenomenon of cost-push inflation as well as the negative relation between inflation and economic growth. The impact of liquidity on inflation is positive, while the impact of economic growth on inflation is negative. Meanwhile, in West Nusa Tenggara, the impact of economic growth on inflation is positive. On the other hand, the impact of liquidity and NPL on inflation and economic growth is negative. In conclusion, generally, the economy in West Nusa Tenggara is better than the East Nusa Tenggara. The key to improving the economy of Nusa Tenggara is by improving its liquidity. This can be done by increasing the volume of public savings to increase bank credit capacity.

• The Journal of Asian Finance, Economics and Business
• /
• v.8 no.4
• /
• pp.11-19
• /
• 2021

This study aims to analyze the causality relationship between sectoral stock markets (agricultural, financial, industrial, and mining sectors) and economic growth in the short and long term as well as to analyze whether it has similar types or not. The data used is quarterly time-series data (first quarter 2009 to fourth 2019). To determine the causality relationship, this study conducts a variable and multivariate causality test. The results of the varying granger causality test show that there is only a one-way relationship, where the economic growth of the agriculture sector affects its shares. A one-way relationship also occurs in stocks of the industrial sector, which has an influence on economic growth. The multivariate causality test shows that the economic growth of the agricultural sector has a two-way causality relationship, and it also exists between the industrial sector and the financial sector stock markets. The two-way causality relationship between the stock market and sectoral economic growth is a convergence towards long-term equilibrium. The findings of this study suggest that the government through the Financial Services Authority and the Indonesia Stock Exchange have to maintain stability in the stock market as a supporter of the national economy.

• Asian Journal of Business Environment
• /
• v.10 no.1
• /
• pp.29-36
• /
• 2020

Purpose: This study aims to analyze the effect of macroeconomic and non-macroeconomic determinants of capital flight. Research design, data and methodology: With five determinants, this survey was conducted by Eviews 10, and the ordinary least squares (OLS) as a statistical method was applied for examining the research hypothesis. The five determinants are a budget deficit, economic growth, inflation rate, the exchange rate, and sovereign rating. The capital flight measurement uses the World Bank residual approach. The data derive from the Central Bank of Indonesia, BPS-Statistics Indonesia, OECD, and Moody's Investor Service. Results: The result considers that economic growth, the exchange rate, and the sovereign rating will decrease capital flight. In addition, the budget deficit and the inflation rate will increase capital flight. The sovereign rating decreases capital flight bigger than the other determinants. In addition, the exchange rate is statistically significant. Conclusions: The most influential problem of capital flight in Indonesia is because of non-macroeconomics factor political issue, corruption, bad regulation, and others. That's why the investment climate in Indonesia is still not secure. We propose that the regime would have to amend the business rule for reducing capital, raising the investment climate, and demonstrating the creative industry.

• The Journal of Asian Finance, Economics and Business
• /
• v.9 no.10
• /
• pp.39-48
• /
• 2022

This research aims to investigate the application of Keynes's theory in Indonesia, particularly in solving unemployment and poverty problems through government spending, economic growth, and human resource capacity. The basic concepts of the Keynesian theory were used as a method, through which government spending was harnessed toward economic growth in reducing unemployment and poverty rate. The analytical materials used were panel data for the 2017-2021 period in Central Java, Indonesia. The analytical methodology used was a multiple regression experimental design in selecting the best model according to Keynes's theory, especially for overcoming formidable problems. The main results showed that large Government spending program is ineffective in encouraging pro-growth, pro-job, pro-poor, and pro-equity development policy strategies. The causes of this failure include the violation of Keynes' assumptions about rationality and the low quality of education investment, which do not encourage productive and innovative entrepreneurship, as well as self-employment opportunities. As a result, government spending, including subsidies and direct financial assistance, used to implement the macroeconomic monetary, unstructured, and fiscal policy system is insufficient to significantly reduce the enormous difficulties. The main research results confirm that human capital capacity is the key to mitigating and reducing unemployment and poverty.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.10
• /
• pp.571-579
• /
• 2020

This paper examines how human capital and other economic variables, such as private investment, economic growth, government investment, inflation, and unemployment influence inequality in Indonesia's provinces. We apply panel data model with fixed effect estimation for the data of 34 provinces from the period 2013 to 2019. We develop a new index for human capital using the education index approach. The results show that human capital has a negative and significant effect on income inequality. An increase in human capital is related to an increase in knowledge and competence due to the longer average school year and expectations of the school year. Human capital has increased the possibility of a person being accepted into the job market and earning a higher income; hence, it lowers income inequality. We also find that inflation leads to a higher gap of income distribution. A further implication of this situation is that the rise in inflation causes an increase in low-income people, and as a consequence, makes their lives worse off. This paper will be beneficial for policy-makers for whom human capital, which is measured using an education index, is an important factor that significantly affects income inequality, in addition to other economic factors.

• Asian Journal of Business Environment
• /
• v.12 no.2
• /
• pp.1-12
• /
• 2022

Purpose: This study aims to analyze the inclusive growth in Central Sulawesi Province, an eastern province of Indonesia, up to the districts/cities level. The inclusive growth is analyzed by using Ramos, Ranieri, and Lammens' index that has three indicators which are employment, poverty, and income inequality. Research design, data, and methodology: This study uses panel data of 13 districts/cities in Central Sulawesi Province from 2015 to 2019. The statistical regression used is the panel regression method to analyze the determinants of inclusive growth there. Results: The study found that the average inclusive growth of districts/cities in Central Sulawesi is increasing from the low-level in 2015 to mid-level in 2019. The panel's data regression using fixed effect model FGLS-SUR found Investment (GFCF), Road Infrastructure, HDI, and Processing Industry have a significant positive effect. Regional minimum wage (RMW) has a significant negative effect. Government Expenditure on Education and Health Function has no significant positive effect on inclusive growth. Conclusions: throughout the study period, gini coefficient and poverty rate is slowly decreasing, while employment to population ratio remains volatile in districts/cities of Central Sulawesi.

• The Journal of Asian Finance, Economics and Business
• /
• v.8 no.5
• /
• pp.829-837
• /
• 2021

The study investigates the impact of the Counter-Cyclical Buffer Policy (CCB) on regional development bank profitability in Sumatra, Indonesia. CCB requires banks to hold capital at times when credit is growing rapidly so that the buffer can be reduced if the financial cycle turns down or the economic and financial environment becomes substantially worse. This study employs time series data of regional development banks (RDBs) in Sumatra Island, Indonesia. The methodology applied in this study is a panel dynamic model with Generalized Methods of Moments (GMM). The results show that increasing capital through the implementation of CCB did not have a significant effect on RDBs' profitability. The findings of this study suggest that the activation and implementation of CCB lead to an increase in the amount and cost of loans to companies but do not affect the profitability of RDBs. The value of a Non-Performing Loan (NPL) proved to have a negative and significant effect on bank profitability. The CCB policy aims to overcome the pro-cyclicality of credit growth and improve bank resilience through increased capital which is expected to reduce excessive credit growth as a source of systemic risk. This causes a lack of lending to the community so that the profits obtained by the bank decrease.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.7
• /
• pp.241-249
• /
• 2020

The role of money in the modern economy highly determines the intensity and the development of the macroeconomy. The money supply is assumed to be as much as money demand, which reflects the economic character of a country and indicates the growth and development of macroeconomy. In Indonesia, the money supply (M1) is related to the economic dynamics in either the monetary market or the goods market. This research aims at analyzing factors that influence the money supply and to what extent the economic factors affect the money supply in Indonesia. The analysis method used in this research was Vector Autoregressive (VAR) with some variables, such as money supply (M1), interest rate, and Gross Domestic Product (GDP) from the 1st quarter of 2001 until the 1st quarter of 2013. The data collection method was in the form of data compilation from credible sources, such as Bank of Indonesia (BI), Central Bureau of Statistics (CBS), and International Financial Statistics (IFS). To obtain adequate analysis results, several tests were taken, such as unit-root test, Granger causality test, and optimal lag. VAR analysis formulates the correlation among independent variables, so it also sees the study of impulse response and matrix decomposition.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.9
• /
• pp.755-767
• /
• 2020

The objective of this study is to examine and provide guidelines for regional governments, communities, and the private sector in planning and implementing poverty-reduction activities that are more effective, efficient, and targeted. Besides, this research's specific aims are: 1) increasing the rate of regional economic growth through optimization of potential sources of local income, 2) increasing per-capita income, and 3) reducing poverty, unemployment, and social-economic inequality of the community. The study was conducted in North Morowali District, Central Sulawesi Province, Indonesia, in 2018-2019. The research approach used quantitative and qualitative descriptive analysis. Data sources include sources from the Focus Group Discussion (FGD) and Regional Statistics. The results of this study are based on the Millennium Development Goals (MDG's) indicators that there are four priority scales in poverty reduction, namely, Health and Infrastructure (Priority I), Education (Priority II), Food stability (Priority III), and Population and Employment (Priority IV). Therefore, as a solution to poverty alleviation strategies, the cost approach through regional economic optimization and local income sources and community empowerment factors are essential. Apart from that, the involvement between elements (government, organizations, society, universities, and institutions) is expected to continue as an effort to realize poverty reduction can be optimally overcome.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.8
• /
• pp.681-693
• /
• 2020

This study sees a critical gap in the previous body of research, which it seeks to fill; the disclosure of the unemployment ratio correlation has only been measured by the level of economic growth. This study is to add investment variables and government expenditure variables that objectively aim to measure the level of effectiveness in handling the unemployment ratio, which is then a measurement of the effectiveness of unemployment. Economic growth is measured by its impact on income inequality through empirical, conceptual relationships as a critical review and economic strategy for the future. The research uses secondary data on Indonesian macro and microeconomics since 2003-2018, then testing uses a quantitative approach to correlation, regression, and scatterplot. The results of this study show correlations between variables, and volatiles on the graphs show a similar trend. In other words, variables are bound together and support each other. The strategy of prioritizing the scale of government expenditure and investment to reach the target is the primary concern, so that the economic cycle can be optimal and equipped to face the possibility of an economic recession in the future. Many factors cause complex income inequality, though investment does not show a correlation to income inequality.