The Influence of Asset-Liability Management on Economic Value Added in Commercial Banks of Indonesia

Setiadi, Pompong B and SUNDJOTO, SUNDJOTO and Rahayu, Sri (2015) The Influence of Asset-Liability Management on Economic Value Added in Commercial Banks of Indonesia. Journal of Basic and Applied Scientific Research, 5 (6). pp. 32-44. ISSN 2090-4304

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Abstract

The research is aimed: (1) to examine and to analyze the influence of asset management (AM) on EVA in commercial banks of Indonesia, which the questioned asset is asset portfolios in form of placement in other banks, security, referred credit, other placement, asset total growth, contingency-commitment receivable growth, and fixed asset; (2) to observe and to analyze the influence of EVA reflected in economic valued added in banking firms on asset management (AM) in commercial banks of Indonesia; and (3) to investigate and to analyze the influence of liability management (LM) on EVA in commercial banks of Indonesia, which the questioned liability is liability portfolios in form of demand deposit, saving, time deposit, deposit certificate, security, loan accepted, other duty, equity, contingencycommitment payable growth, and debt to equity ratio. Method of research is based on the assessment model suggested by Dodd and Chen (1997) [1] and Dodd and Johns (1999) [2]. Research type is explanatory research. The design of research is pursuant to Kerlinger (2000) [3] and data analysis technique uses the analysis device developed by Tatham and Black (1992) [4]. Result of research indicates that: (1) the influence of AM on EVA in commercial banks of Indonesia is showing good result based on criteria evaluation because causal line that explains the causality relationship between variables is supported by the fact. Therefore, information matrix is good and the influence is positively significant by score 0.201 at p=0.001, which means that AM variables, which include the mixture of placement in other banks, security, referred credit, other placement, asset total growth, contingencycommitment receivable growth, and fixed asset, are influencing, in higher rate, the creation of value added of commercial banks of Indonesia, especially those using economic value added (EVA) proxy. Asset portfolios in form of credit/loan have the most dominant influence among other AM variables on EVA by score 0.997 at p=0.000, meaning that the higher credit/loan is related to the higher EVA. It is concluded that banks which allocate more funds into profitable asset portfolios and which are capable to control the risk of fund delivery are those which create banking value added with EVA proxy. (2) The influence of EVA on AM in commercial banks of Indonesia based on goodness of fit index is not showing good result based on criteria evaluation because the hypothesized model is unidentified (identification problem). It implies that causal line that explains causality relation between variables is not supported by the fact. Therefore, information matrix is failed to present and it fails also to explain causality relation between variables. (3) The influence of LM on EVA in commercial banks of Indonesia is not-significant. It is proved by the result that is scored 0.097 at p=0.167, meaning that despite the level of inf luence of LM variables, it is not-significantly influencing the creation of value added of banks by using economic value added (EVA) proxy. These results of research are not supporting the finding of Clarke et al (1991) [5] that liability management is positively influencing firm value added. It is also concluded that the management of commercial banks is not consistent to the policy of banks itself because the funds collected by the banks and presented in liability management cannot be redistributed to the communities such that the cost to obtain fund sources is very expensive. The income of banks cannot compensate for cost expense which may force the banks failed to create f irm value added by using economic value added (EVA) proxy.

Item Type:	Article
Uncontrolled Keywords:	Indicator, Performance, Finance, Management, Asset, Liability, Economic Value Added, Bank
Subjects:	Manajemen
Depositing User:	Unnamed user with email lib.stiemahardhika@gmail.com
Date Deposited:	02 Jun 2022 12:53
Last Modified:	02 Jun 2022 12:53
URI:	http://repository.stiemahardhika.ac.id/id/eprint/2797

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