The Contributions of Savings and Loans on GDP Growth: The Case of Indonesia

EcoMod Conference Proceedings, published by Ecomod Press, 2014

140 Pages Posted: 16 Oct 2017

See all articles by Muhammad Hanafi

Muhammad Hanafi

Department of Economics, University of Indonesia

Berly Martawardaya

Department of Economics and Bussiness, University of Indonesia

Andi M. Alfian Parewangi

Department of Economics and Bussiness, University of Indonesia

Date Written: July 3, 2014

Abstract

The capital consists of savings, loans, FDI, and DDI and is important production factors. The contribution of savings and loans are estimated using panel regression and Generalized Method of Moment (GMM). The results show that savings and loans (investment, working capital, and consumption) have significant effect on economic growth with the respective negative and positive effects. Moreover, FDI, DDI, School Enrollment Rate, and Population Growth also play a significant role on growth with distinctive coefficient describing respective effects for each variable on growth. Furthermore, sector-specific analysis gives very dynamic effects on growth in the case of Indonesia. In order to identify long-run bidirectional relationship between variables, we employ Granger Causality Test using Vector Error Correction Model (VECM). As presents in the result and analysis, only loan for consumption performs causal relationship with GDP growth during the period.

Keywords: Savings, Loans, and Gross Domestic Product

JEL Classification: E21, O47, P42

Suggested Citation

Hanafi, Muhammad and Martawardaya, Berly and Parewangi, Andi M. Alfian, The Contributions of Savings and Loans on GDP Growth: The Case of Indonesia (July 3, 2014). EcoMod Conference Proceedings, published by Ecomod Press, 2014, Available at SSRN: https://ssrn.com/abstract=3053665

Muhammad Hanafi (Contact Author)

Department of Economics, University of Indonesia ( email )

Jl. Prof. Sumitro Djojohadikusumo
Depok, DKI 16424
Indonesia

HOME PAGE: http://www.feb.ui.ac.id/

Berly Martawardaya

Department of Economics and Bussiness, University of Indonesia ( email )

Kampus Baru
Depok, West Java 16424
Indonesia

Andi M. Alfian Parewangi

Department of Economics and Bussiness, University of Indonesia ( email )

Kampus Baru
Depok, West Java 16424
Indonesia
+62-21-33007995 (Phone)
+62-21-74861482 (Fax)

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