The Development of Real Sectors in Indonesia: Significant Role of Conventional and Islamic Banking

1 Presented in 6th International Colloquium on Business & Management 2013, Bangkok, Thailand

The Development of Real Sectors in Indonesia:

Significant Role of Conventional and Islamic Banking

Fitri Hastuti, SE, M.Si

Dr. Nury Effendi, SE, MA

Faculty of Economics and Business

University of Padjadjaran Indonesia

[email protected]

Abstract

This paper mainly focused in comparing the role of conventional and Islamic

banking on the development of real sectors in Indonesia. This study also included the

analysis for economic sector growth. The Growth Regression Cross Sectional was used

as quantitative analysis to capture the significant effect of both conventional and Islamic

banking credit on the development of economic sector in different provinces in

Indonesia. This research captured the lending activity of Islamic banks and conventional

banks in 9 provinces with the highest Islamic banking activities from 2007 until 2010.

Although overall Islamic bank financing activity did not affect output in province

samples significantly, based on economic sector analysis Islamic banks had a major role

in the development of agricultural, transportation, and services sectors. Lending activity

from Islamic banking statistically affect the increase of output in those sectors, with the

confidence level of 95%. The increase of Rp. 1 billion lending value from Islamic banks

will give impact as follows: 1) an increase in agricultural sector output of Rp. 10.5

billion 2) an increase in transportation sector output of Rp. 14.15 billion 3) an increase in

service sector output of Rp. 1.22 billion. The margin of financing rate from Islamic and

conventional bank also played a major role in increasing output of agricultural,

electricity gas and water, as well as transportation sector. The smaller the margin rate

between Islamic and conventional bank would increase output in agriculture sector.

Keywords: Development of Real Sector, Banking Sector, Financing Activity,

Financing Margin


I. Introduction

This paper mainly focuses in analyzing the role of conventional and Islamic

banking on the development of real sector in Indonesia, including the analysis for

economic sector growth. In the 1950s and 60s, it was quiet a popular thought that

banking sector could promote economic growth. As mentioned by Miwa and Ramseyer

(2000), Alexander Gerschenkron claimed that banks facilitate economic growth among

“backward” countries. The same notion also occurred 1990s and 2000s, where many

theorists claim the importance of banks in promoting growth. Banks have significant

roles particularly because of their superior monitoring and screening capabilities.

Through those qualifications, banks can reduce the asymmetric information, moral

hazard and adverse selection problems, and thereby improve the credit allocation.

Montiel (2003) stated that a financial system can contribute to economic growth in

three channels, incentive creation for accumulation of physical and human capital,

capital allocation to the most productive activities, and decreasing the amount of

resources used in the process of intermediation. Levine (1997:691) differentiated five

basic functions of financial systems, including the facilitation of risk management,

resources allocation, monitoring of managers and control over corporate governance,

savings mobilization, easing the exchange of goods and services, and finance causes

growth

Burzynska (2008) affirmed evidence that there is a long-run equilibrium

relationship between economic growth and financial development. The presence and

direction of causality is affected by the type of bank as well as type of loan. There is

bidirectional Granger-causality between economic growth and credit extended by policy

banks. Similar causality exists between economic growth and operations of rural credit

cooperatives. Also state-owned commercial banks and other commercial banks are

economically related to economic growth. However, there is only a unidirectional

causality from economic growth to financial development in their case. The effects of

activity of distinct banks are partially mirrored in the results of Granger-causality for

different types of loans. Loans to construction sector, which can be linked to policy

banks’ projects, are proved to Granger-cause economic growth. There is also

unidirectional causality from economic growth to loans to commercial sector. In

sustaining the growth he suggested to further develop financial services, ensure better


credit allocation and improve access to financing for private as well as small and

medium-sized enterprises.

The central bank act number 23 of 1999 amended by act number 3 of 2004 stated

that Indonesia has conducted both Islamic and conventional monetary operations. The

banking act number 7 of 1992 and amended by act number 10 of 1998 has allowed the

implementation of Islamic banks along with the conventional ones. Rifki Ismal (2011)

affirmed the ideal practices of Islamic banks should directly extend funds to the real

sector and seek profit directly from the robust performance of the real sector. He also

pointed out that most of Islamic banks in Indonesia are retail banks which extend

financing directly to real sector. However, limited number of Islamic banks holds back

the industry to optimally meet the domestic demand from Moslem population.

Lacey (2009) stated that Indonesian Islamic banks are performing below

expectations. He mentioned the combination of Islamic banking and finance industry,

comprising banking and bonds, financing government debt, consumer and loans to small-

and medium-sized enterprises (SMEs), needs to go for volume if it is to impact

significantly on the vigorous Indonesian economy, still growing at 4.5%. However Bank

lending and bank capitalization were growing despite the global downturn. There lies the

basic problem of the Islamic banks. They start from such a small base that they can hardly

keep up. That problem gets bigger when they need to make gains from their share of

capital growth or lending. The problem he underlined is mathematical as well as about the

political will of the government and lack of capacity of the Islamic banking and finance

private sector. Firstly, Islamic banking and finance remains weak in Indonesia, accounting

for only 3% of banking assets and 2.1% of bank lending. While Islamic banking

worldwide deploys US$250 billion with a 15% growth rate. However, Indonesia, with

15% of the world’s Muslim population, deploys only 2.1% of global Islamic banking

assets. Secondly, the average asset growth of Islamic banking in Indonesia, averaged 60%

between 1999 and 2004 and fell to an average 46% from 2005 to 2009, compared with a

steady average 13% growth in the capital base of conventional banks in the same period.

In order to catch up and start gaining ground, Islamic banking needs higher growth rates

than anything they have achieved in the past.

Muliaman D Hadad (2009) assumed unless Islamic banking in Indonesia changes its

mindset and goes for volume, it might never catch up with the growth rate of conventional

banking and never significantly increase its market share of lending or share of capital. He


stressed that Islamic banks need to target larger local corporations and growth sectors like

agriculture, Indonesian food, energy, healthcare, technology and education. To match the

Malaysian performance on percentage volume of national banking capital deployed

(15%), Indonesian Islamic banking would need to mobilize US$44 billion within five

years, or about US$91 billion within 10 years.

Rifki Ismal (2011) mentioned the challenge for Islamic banking industry in

Indonesia covers three aspects, specifically small market share, lack of human resources

and lack of product development. First problem arises due to limited involvement of

government funds, non comprehensive understanding of depositors, business partners

and public, as well as the limited number of Islamic banks and windows. However, this

problem can be solved through ways such as the willingness of the government to locate

hajj funds (USD 2.6 billion) in Islamic banks, invest assets of state owned companies

(USD250 billion) in Islamic banks and convert at least one of 4 state banks (total assets

of USD111.5 billion) into Islamic banks. This solution can increase Islamic banking

market share significantly. Second problem, number of offices accelerates 44.5% and it

needs additional human resources that cannot be fulfilled because of the limited formal

and informal institutions teaching Islamic banking/finance, lack of books on Islamic

banking and finance and no Islamic banking and finance curriculum in all level of the

national education system. Ideally, human resources should understand both the

conventional and Islamic finance perfectly. However, almost all of the government and

private universities in Indonesia do not have Islamic banking/finance program. Third

problem, the Islamic banking has limited products where all the existing contracts are

classic types. Nonetheless, even though there are a variety of banking products it will be

useless if the public is less understood.

Yusuf Wibisono (2011) revealed since Islamic banking has the focus to micro-

financing, financing carried out by Islamic banking will encourage economic growth in

the real sector and hence will improve income distribution. Finally it will reduce the

inequalities of income and enhance the people welfare.

Yet, due to the lack of success in implementing risk-sharing financial techniques,

many observers point out that Islamic banks are reluctant to invest in long-term projects.

By concentrating on financing of working capital and short-term trade in commodities,

Islamic banks negatively discriminate long-term investment projects and therefore

reduce the prospects for economic growth and development.


II. Overview of Empirical Research

2.1. The Role of Banking Sector to Economic Growth

As a summary, the table below describes some studies that reveal the contribution

of the banking sector to economic growth.

Table 1

Banking Sector and Economic Growth

No Finance causes Growth Finance not causes Growth

1 King and Levine (1993; 1993a)

80 countries, period between 1960 and

1989.

Financial services are importantly

linked to economic growth and

productivity improvements.

The level of financial development

predicts future economic growth and

future productivity advances. In other

words, finance does not merely follow

economic activity.

Demetriades and Hussein (1996)

Time series analysis to 16 countries for

the period between 1960 and 1990.

They strongly oppose the use of cross-

section equations; differences in financial

sector development may reflect different

institutional characteristics, different

policies, and differences in their

implementation.

It cannot be concluded that it universally

holds that finance cause growth nor that

finance follows growth.

2 De Gregorio and Guidotti (1995)

98 countries from 1960 to 1985.

The impact of financial development

on growth is broadly positive. It

changes according to regions, time

periods, and levels of income.

The positive effect is strong in middle

and low-income countries.

It is stronger in the 1960s than in the

Neusser and Kugler (1998)

Time-series analysis on a sample of 13

OECD9 countries for 1970 to 1991.

It is not possible to make a general

statement whether financial development

is truly an engine of growth or just a sign

of the evolution of the whole economy

due to independent factors. The causal

link is empirically weak for most of the


1970s and 1980s.

The effect is due mainly to its impact

on the efficiency rather than the

volume of investment.

smaller countries, which the authors

explain by different degrees of capital

mobility.

3 Odedokun’s (1996)

71 developing countries, varying

periods that generally span the 1960s

and 1980s.

Financial intermediation promotes

economic growth in roughly eighty

five percent of the countries and that

the growth-promoting patterns of

financial intermediation are practically

invariant across various countries and

regions.

Koivu (2002)

25 countries during 1993-2000.

It is not clear whether financial

intermediation is more important for

economic growth in the short or long run,

even though there is more evidence in

favor of the long run.

4 Levine (1998)

43 countries from 1976 to 1993.

His results show that there is a

statistically significant and

economically large relationship

between banking development

(measured as credit allocated by

commercial and other deposit-taking

banks to the private sector divided by

GDP) and long-run rates of economic

growth.

Favara (2003)

85 countries in the sample; 1960-1998.

The effects of financial development

vary considerably across countries and

that there is no obvious pattern related to

geographic location, the level of

economic development, or institutional

characteristics

Business cycles and measurement errors

are the driving force of these findings

5 Calderon and Liu (2003)

109 countries from 1960 to 1994 using

Geweke decomposition test.

a) financial development generally

leads to economic growth; b) the

Granger causality from financial

development to economic growth and

Shan (2005) and Zang and Kim (2007)

Variance decomposition analysis, 1985

to 1998, quarterly data, and panel

analysis, similar results.

Financial development is no more than a

contributing factor and, almost certainly,

not the most important factor.


the Granger causality from economic

growth to financial development

coexist; c) financial deepening

contributes more to the causal

relationship in the developing

countries than in the industrial

countries; d) the longer the sampling

interval, the larger the effect of

financial development on economic

growth; e) financial deepening propels

economic growth through both a more

rapid capital accumulation and

productivity growth, with the latter

channel being the strongest.

Highlights the inappropriateness of cross-

sectional analysis.

6 Fink et al. (2005)

11 transition countries (1990-2001).

Financial sector development triggers

short run growth effects rather than

spurring long term growth.

2.2. The Advantage of Islamic Banking: Zero Interest

Below are some scientific discussions about the benefit of the existence of Islamic

banking, zero interest rate:

a. Maurice Allais (1947) reached the conclusion that the optimum real interest rate is

zero.

b. M.Sidrauski (1967) by using a dynamic utility function in which money was

inserted, reached the conclusion that in order zero down welfare cost, interest rate

must be equal to that of social marginal cost. Applying it to money it amounts to

zero interest.

c. B.P.Pesek, and T.R. Sving (1967) have argued that the essential characteristic of


money is its non-interest bearingness, and that if money were to bear interest it

would cease to be used as money.

d. Professor M. Friedman (1969) reached the conclusion that zero nominal interest

rate is the necessary condition for optimal allocation of output factors.

e. US Federal Reserve Economists of Minneapolis District (1998), showed that for

optimal allocation of output factors, not only is zero interest necessary condition,

but it is sufficient too.

In summary the studies propose the importance of zero interest rate. This is what

has been carried out in Islam, which begins with sanction against interest (Riba), and

ends with the welfare state; the one ideally achieved in Islam.

Furqani & Mulyany (2009) examined the dynamic interactions between Islamic

banking and economic growth in Malaysia by employing the co-integration test and

vector error model (VECM) to see whether the financial system influence growth and

growth transforms the operation of the financial system in the long run. They use time

series data of total Islamic bank financing and real GDP per capita, fixed investment and

trade activities to represent real economic sectors. Their research found that in the short

run only fixed investment that granger cause Islamic bank to develop from 1997:1 –

2005:4. Whereas in the long run, there is evidence of a bidirectional relationship between

Islamic bank and fixed investment and there is evidence to support demand following

hypothesis of GDP and Islamic bank, where increase in GDP cause Islamic bank to

develop and not vice versa.

III. Method of Analysis

The methods of analysis are qualitative and quantitative analysis. Quantitative

analysis used is Growth Regression Cross Sectional, to capture the significant effect of

both conventional and Islamic banking credit on the development of economic sector in

different provinces in Indonesia.

The sample would be the lending activity of Islamic banks and conventional banks

in 9 provinces with the highest Islamic banking activities from 2007 until 2010.

Yit = f (IBcreditit, CBcreditit, Infrastructureit, MIBCBit) … Eq (1)


The analysis itself can be categorized into two main discussions: 1) output for each

province sample, 2) output per economic sector in each province sample.

For the first discussion, the followings explain about the data used:

Yit : total output in province i for period t (billion rupiah)

IBcredit it : value of credit from Islamic banking in province i for period t

(billion rupiah)

CBcreditit : value of credit from conventional banking in province i for

period t (billion rupiah)

MIBCBit : margin between Islamic banking lending rate to conventional

banking lending rate in province i for period t (percentage)

Infrastructureit : length of road, highway, bridge, and flyover in province i for

period t (kilometers)

For the second discussion, the period sample is decreased, only from 2009 until 2010

because the complete data for economic sector per province in Indonesia was only

available since 2009. Hence the variables used become:

Yjit : economic sector j output in province i for period t (billion

rupiah)

IBcreditjit : value of credit from Islamic banking to economic sector j in

province i for period t (billion rupiah)

CBcreditjit : value of credit from conventional banking to economic sector

j in province i for period t (billion rupiah)

MIBCBjit : margin between Islamic banking lending rate to conventional

banking lending rate to economic sector j in province i for

period t (percentage)

IV. Data

Annex 1 describes historical data of financing activities of Islamic banks since

2007 until August 2012 for the whole province in Indonesia. The data is significant in


deciding the province samples whose lending activities are higher than Rp. 3,000 billion.

Later on, these province sample will be collected other important variables such as

commercial banks lending activities, output in economic sectors that receive dominant

credit from Islamic banks, conventional banks, the difference in interest of lending

activities between Islamic banking and conventional banking, as well as infrastructure

conditions. Initially the time range of this study is from 2007 until 2011. However, due

to the limitation in economic sector output data, this study is performed from 2007 until

2010.

From the mentioned annex, it is clear that Islamic banks’ lending activity is

dominant in 9 provinces, DKI Jakarta, West Java, East Java, Central Java, North

Sumatera, Banten, West Sumatera, South Sumatera and South Sulawesi. Hence, we will

focus the discussion based on the data from these provinces.

Graph 1

Conventional Bank Lending Value in 2010 (Billion Rp)

Source: www.bi.go.id

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Banten West Java CentralJava

East Java SouthSulawesi

WestSumatera

SouthSumatera

NorthSumatera

Agriculture Mining Manufacturing

Electricity G&W Construction Trade R&H

Transportation W&C Business Services Social Services


Graph 1 describes lending value from conventional banking for each economic

sector. Manufacturing and trade sectors received most lending from conventional banks

in Banten, West Java, Central Java, North Sumatera, and South Sumatera. Specifically in

East Java province, conventional banks gave most lending to manufacturing compare to

other sectors. In South Sulawesi, manufacturing and constructions dominates the lending

while in West Sumatera, manufacturing and agricultural have most access to

conventional banks.

Graph 2

Islamic Bank Financing Value in 2010 (Billion Rp)


Graph 2 shows alternative credit access for economic sectors to banking. Quiet

different to conventional banking, Islamic banks in province samples gave most of their

financing to business service and trade sectors. A quiet significant lending in agricultural

sector existed in North Sumatera.

Graph 3 shows lending value from conventional and Islamic banking in Jakarta

province. Lending value from conventional banks relatively high compare to other

provinces, its gap is also quiet significant from Islamic banks.

0

500

1000

1500

2000

2500

Banten WestJava

CentralJava

East Java SouthSulawesi

WestSumatera

SouthSumatera

NorthSumatera

Agriculture Mining Manufacturing

Electricity G&W Construction Trade R&H

Transportation W&C Business Services Social Services


Graph3. Lending Value of Conventional Bank and Islamic Bank

in Jakarta, 2010 (Billion Rp)


V. Findings

In order to answer the effect of lending activity from Islamic banking and

conventional banking to the development of real sector in provinces sample, we run

equation 1 with cross section data. The results are as follows:

logY = 8.6 + 0.0218 logIB + 0.26 logCB + 0.00000212 Infr + 0.0126 MIBCB

t-stat (39.57) (1.195) (8.75) (0.885) (2.214)

Prob (0.00) (0.252) (0.00) (0.391) (0.044)

R2 0.99992

0

20000

40000

60000

80000

100000

120000

140000

160000

Islamic Bank Conventional Bank


_BANTEN--C -0.284203

_DKI--C 0.464553

_JABAR--C 0.748550

_JATENG--C 0.291848

_JATIM--C 0.744190

_SULSEL--C -0.779469

_SUMBAR--C -0.800500

_SUMSEL--C -0.219334

_SUMUT--C -0.165636

There several points to noted from the equation above:

a. The lending activity of Islamic banks in Banten, DKI Jakarta, West Java, Central

Java, East Java, South Sulawesi, West Sumatera, South Sumatera, and North

Sumatera during period of estimation did not affect the output in those provinces

significantly.

b. The lending activity of conventional banks in provinces samples during period of

estimation affects the output in those provinces significantly at 99 confidence level.

The increase of 1% lending value from conventional banks will increase the output

by 0.26%, ceteris paribus.

c. The greater the margin between Islamic lending rate and conventional banks

lending rate will increase the output by 0.0126%, ceteris paribus.

Table 2

Equation 2 Regression Result

Independent

Variables

Dependent Variable: Sectoral Output

Agri Manuf EGW Constr TRH TWC Services

Islamic Bank

Lending 10.5 -3.68 5.87 3.31 14.54 14.15 1.22

(Prob) (0.00)* (0.46) (0.24) (0.46) (0.29) (0.00)* (0.02)*

Conventional

Bank Lending -0.1 0.53 -0.43 -0.84 -0.01 0.26 -0.00

(Prob) (0.00) (0.18) (0.23) (0.04) (0.74) (0.01) (0.95)

Financing Rate

Margin between

Islamic Bank and

Conventional

Bank

-353.85 -915.62 186.33 272.62 824.09 1041.19 924.15

(Prob) (0.00) (0.39) (0.02) (0.19) (0.51) (0.00) (0.21)

Banten -15476.5 -882.17 64.46 -10515.1 -16737.2 172.5 -11324.7

Jakarta -20688.6 -45962.6 5739.5 47768.8 19326.6 -16006.4 20433.7

West Java 20867.1 91078.3 4021.5 -734.2 27964.3 3473.02 3867.4

Central Java 13331.3 19441.7 -1480.2 -2709.9 -1028.4 1638.9 3135.7


East Java 29287.7 32138.02 1576.6 29.2 66770.1 15588.9 14074.5

South Sulawesi -7405.9 -27123.5 -2513.5 -9485.3 -24550.2 -2891.3 -9270.1

West Sumatera -12275.6 -28586.4 -2605.9 -11615.1 -26857.6 -1654.7 -8256.3

South Sumatera -9601.9 -23135.9 -2705.6 -8188.3 -25688.2 -3680.3 -9229.2

North Sumatera 1962.2 -16967.6 -2096.9 -4550.1 -19199.5 3359.3 -3431.1

Agri : Agriculture, Hunting and Agriculture Facility

Manuf : Manufacturing

E, G, W : Electricity, Gas and Water

Const : Construction

TRH : Trade, Restaurants and Hotels

TWC : Transportation, Warehousing and Communication

Although overall Islamic bank financing activity did not affect output in province

samples significantly, based on economic sector analysis Islamic banks has a major role

in the development of agricultural, transportation, and services sectors. Lending activity

from Islamic banking statistically affect the increase of output in those sectors, with the

confidence level of 95%. The increase of Rp. 1 billion lending value from Islamic banks

will give impact as follows: 1) an increase in agricultural sector output of Rp. 10.5

billion 2) an increase in transportation sector output of Rp. 14.15 billion 3) an increase in

service sector output of Rp. 1.22 billion.

The margin of financing rate from Islamic and conventional bank also played a

major role in increasing output of agricultural, electricity gas and water, as well as

transportation sector. The smaller the margin rate between Islamic and conventional bank

would increase output in agriculture sector.

VI. Conclusions

The role of Islamic banking in Indonesia is still not as large as conventional

banking. This study seeks to assess the potential of the Islamic banking in promoting

economic growth in Indonesia compared to conventional banking in provinces where

Islamic banking lending activities grow significant. Although Islamic banks financing

activity is still low relatively to conventional banking, its significant role can be seen

from the development in agriculture, transportation, and service sectors. Hence, in the

future not only Islamic banks market will grow faster, it can push the development in

sectors that is neglected by conventional banks.

References


Badun, Marijana. 2008. Financial Intermediation by Banks and Economic Growth: a

Review of Empirical Evidence. Institute of Public Finance, Zagreb.

Bjorvatn, Kjetil. 1998. Islamic Economics and Economic Development. Forum for

Development Studies.

Furgani, Hafas & Mulyany, Ratna. 2009. Islamic Banking and Economic Growth:

Empirical Evidence from Malaysia. Journal of Economic Cooperation and

Development. 59-74.

Miwa, Yoshiro & Ramseyer, J Mark. 2000. Banks and Economic Growth: Implications

from Japanese History. Harvard Law School. Discussion Paper No. 289.

www.bi.go.id


Annex 1.

Financing Activity of Islamic Banks

per Province in Indonesia

(Billion Rp)

Province 2007 2008 2009 2010 2011 2012

August

DI Aceh 279 538 849 1,617 2,338 2,597

North Sumatera 1,668 2,369 2,840 3,133 4,936 6,210

West Sumatera 398 602 833 1,833 2,476 3,081

South Sumatera 509 761 1,052 1,566 2,272 3,006

Bangka Belitung 39 41 37 135 286 376

Jambi 145 275 411 712 1,194 1,547

Bengkulu 175 201 235 311 421 497

Riau 696 893 1,047 1,589 2,323 2,751

Kepulauan Riau 297 337 401 852 1,380 1,652

Lampung 235 368 515 922 1,501 1,782

DKI Jakarta 12,959 18,172 21,158 26,900 38,981 48,760

West Jawa 3,065 3,766 4,666 8,029 11,945 14,419

Banten 962 841 1,111 2,086 3,707 4,048

Central Jawa 1,240 1,958 2,611 4,170 6,503 7,211

DI Yogyakarta 318 508 629 868 1,451 1,614

East Jawa 1,774 2,566 3,519 5,627 9,075 10,773

Bali 44 73 115 298 545 728

West Kalimantan 364 476 588 720 1,080 1,538

Central

Kalimantan

21 25 37 772 196 323

East Kalimantan 575 706 1,048 924 2,193 2,394

South Kalimantan 570 795 847 1,156 1,477 1,830

North Sulawesi 73 114 145 240 356 427

Gorontalo 71 63 86 168 221 251

West Sulawesi - - 7 53 131 194

Central Sulawesi 98 136 163 390 642 757

South East

Sulawesi

161 180 157 187 310 391

South Sulawesi 858 978 1,098 1,672 2,844 3,436

Maluku 14 16 13 28 54 69

North Maluku 33 36 35 87 123 138

NTB 200 261 396 556 895 1,149

NTT 15 24 33 75 156 182

West Irian Jaya 35 42 62 89 114 127

Papua 53 77 140 272 348 473

Outside Indonesia - - 3 145 183 217

Total 27,944 38,195 46,886 68,181 102,655 124,946



Annex 2.

Regression Result

Dependent Variable: LOG(PDRB?)

Method: Pooled Least Squares

Date: 11/28/12 Time: 13:44

Sample: 2007 2009

Included observations: 3

Cross-sections included: 9

Total pool (balanced) observations: 27

Variable Coefficient Std. Error t-Statistic Prob.

C 8.600449 0.217325 39.57405 0.0000

LOG(IB?) 0.021758 0.018211 1.194731 0.2520

LOG(CB?) 0.260152 0.029730 8.750470 0.0000

INFR? 2.12E-06 2.40E-06 0.885137 0.3910

MIBCB? 0.012624 0.005703 2.213612 0.0440

Fixed Effects (Cross)

_BANTEN--C -0.284203

_DKI--C 0.464553

_JABAR--C 0.748550

_JATENG--C 0.291848

_JATIM--C 0.744190

_SULSEL--C -0.779469

_SUMBAR--C -0.800500

_SUMSEL--C -0.219334

_SUMUT--C -0.165636

Effects Specification

Cross-section fixed (dummy variables)

R-squared 0.999920 Mean dependent var 11.64827

Adjusted R-squared 0.999851 S.D. dependent var 0.851925

S.E. of regression 0.010390 Akaike info criterion -5.989788

Sum squared resid 0.001511 Schwarz criterion -5.365867

Log likelihood 93.86214 Hannan-Quinn criter. -5.804264

F-statistic 14565.99 Durbin-Watson stat 2.392260

Prob(F-statistic) 0.000000

The Development of Real Sectors in Indonesia: Significant Role of Conventional and Islamic Banking

Documents

Transcript of The Development of Real Sectors in Indonesia: Significant Role of Conventional and Islamic Banking