Conference Paper
“The New Normal Era: Looking for Recovery Strategies for Economy and Businesses”
The First International Conference of Economy, 16 November 2021, Jakarta

The Role of Banking Competitiveness in Increasing National Income through the Transmission Mechanism of The Effects of Bank Lending Channel of Monetary Policy

Bahtiar Usman

Department of Management, Faculty of Economics dan Business,
Universitas Trisakti Jakarta, Indonesia
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Dhea Vanesa Emuldo

Department of Development Economics, Faculty of Economics dan Business,
Universitas Trisakti Jakarta, Indonesia
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Syofriza Syofyan

Department of Development Economics, Faculty of Economics dan Business,
Universitas Trisakti Jakarta, Indonesia
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Abstract

This study aims to determine the role of banking competition in increasing national income through the transmission mechanism of monetary policy credit channel. The dependent variable in this study is gross domestic product (GDP), while the independent variables is BI rate, credit interest rates, banking competition, and lending. This study uses the Vector Autogressive (VAR) method, but because it does not pass the cointegration test, the Vector Error Correction Model (VECM) method is used instead which is part of the Vector Autogressive (VAR) method. By using banking CR4 (concentration ratio of 4 large banks) as a measure of banking competition, it shows that increasing CR4 will reduce banking competition, and reduce investment credit. Investment credit is the dominant variable in influencing the National Income variable.

Keywords: banking competition, credit channel, monetary policy transmission


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International Journal of Small and Medium Enterprises and Business Sustainability
Volume 07 No. 01 March 2022