Why Capital’s Effect Differs in Bank Size?

International Journal of Management and Humanities (IJMH), 2019

4 Pages Posted: 4 Nov 2019

See all articles by Ahmad Aziz Putra Pratama

Ahmad Aziz Putra Pratama

Airlangga University, Faculty of Economics and Business, Master of Science in Management, Students

Date Written: October 16, 2019

Abstract

Banks are trusted institutions. Therefore, bank management must use all of its operational tools to maintain the trust of the community. A strategic tool in sustaining that trust is adequate capital. Until now, banking activities remain the same, but with a different system. Novelty this research is a different effect of bank capital on lending behavior in each bank size category. This study used the fixed effect model in the 2004-2018 period. This study proved that smaller bank tends to implement aggressive strategies with lower capital and higher loan proportion, while larger bank manages to implement a defensive strategy with high capital and higher loan proportion.

Keywords: Bank capital, Loan growth, Bank size

JEL Classification: G20, G21, G40

Suggested Citation

Pratama, Ahmad Aziz Putra, Why Capital’s Effect Differs in Bank Size? (October 16, 2019). International Journal of Management and Humanities (IJMH), 2019. Available at SSRN: https://ssrn.com/abstract=3470999

Ahmad Aziz Putra Pratama (Contact Author)

Airlangga University, Faculty of Economics and Business, Master of Science in Management, Students ( email )

Surabaya
Indonesia
082135948540 (Phone)

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