Article Metrics

Article abstract view : 1379 times
PDF full text: 0 times

Loan-to-Value Policy and Property Loans Risk in Conventional Commercial Banks of Indonesia

Nugroho Sasikirono, Syelma Sumanto, I Made Sudana, Harlina Meidiaswati


This study aims to determine the effect of loan-to-value (LTV) policy on bank's property loan risk. This study utilizes a purposive sampling method and multiple linear regression analysis techniques. The number of samples in this study is 66 banks with 563 observations data. The results show that bank's property loan risk, which is proxied by the NPL ratio of property loans, is lower in the LTV tightening policy period than the easing period. We utilize some control variables in this study: inflation, gross domestic product growth, property loan growth, and bank size. Inflation, property loan growth, and bank size have a significant positive effect on non-performing loans, while gross domestic product growth has a significant negative effect.


Loan-to-value policy, bank risk, property loan risks, non-performing loans, Indonesia.

* Faculty of Economics and Business, Universitas Airlangga, **PT Mandiri Sekuritas *** Faculty of Economics, Kartini University

Full Text:



Abid, L., Ouertani, M. N., & Zouari-Ghorbel, S. (2014). Macroeconomic and Bank-Specific Determinants of Household ’ s Non-Performing Loans in Tunisia : a Dynamic Panel Data. Procedia Economics and Finance, 13, 58–68.

Altunbas, Y., Binici, M., & Gambacorta, L. (2018). Macroprudential policy and bank risk. Journal of International Money and Finance, 81, 203–220.

Ascarya, Rahmawati, S., & Karim, A. (2016). Effectiveness of LTV / FTV as Macroprudential Instrument under Dual Banking System in Indonesia. In 11th International Conference on Islamic Economics and Finance Effectiveness.

Bank of Indonesia. (2016). Analyzing Macroprudential Policy. (Department of Macroprudential Policy, Ed.). Jakarta.

Bian, X., Lin, Z., & Liu, Y. (2018). House price , loan-to-value ratio and credit risk. Journal of Banking and Finance, 92, 1–12.

Dendawijaya, L. (2009). Bank Management. Jakarta: Ghalia Indonesia.

Foos, D., Norden, L., & Weber, M. (2010). Loan growth and riskiness of banks. Journal of Banking and Finance, 34(12), 2929–2940.

Gunawan, A., & Sudaryanto, B. (2016). Analysis of the Effect of Performance, Size, Inefficiency, Capital, and Third Party Funds on Non-Performing Loans (Study on Conventional Public Commercial Banks in Indonesia Period 2011-2015). Diponegoro Journal of Management, 5(3), 2337-3792.

Hendriati, R. A. (2010). Bank Size, Income Composition, and Earning Volatility Bank. (Undergraduate thesis). Universitas Airlangga.

Klein, N. (2013). Non-Performing Loans in CESEE : Determinants and Impact on Macroeconomic Performance. IMF Working Paper, WP/13/72.

Louzis, D. P., Vouldis, A. T., & Metaxas, V. L. (2012). Macroeconomic and bank-specific determinants of non-performing loans in Greece : A comparative study of mortgage , business and consumer loan portfolios. Journal of Banking and Finance, 36(4), 1012–1027.

Mangeswuri, D. R. (2018). Loan-To-Value Easing Policy. Info Singkat Bidang Ekonomi dan Kebijakan Publik Pusat Penelitian Badan Keahlian DPR RI. Vol.X, No.13/I/Puslit/Juli/2018.

Messai, A. S., & Jouini, F. (2013). Micro and Macro Determinants of Non-performing Loans. International Journal of Economics and Financial Issues, 3(4), 852–860.

Morgan, P. J., Regis, P., & Salike, N. (2015). Loan-to-Value Policy as a Macroprudential Tool: The Case of Residential Mortgage Loans in Asia. ADBI Working Paper Series, 5, 528.

Morgan, P. J., José, P., & Salike, N. (2018). LTV policy as a macroprudential tool and its effects on residential mortgage loans. Journal of Financial Intermediation Journal, 37, 89–103.

Pambudi, E.W. (2013). Economic Growth Analysis and Affecting Factors (Districts/Cities in Central Java Province). Thesis. Faculty of Economics and Business Universitas Diponegoro.

Pirgaip, B., & Hepsen, A. (2018). Loan-to-value policy : evidence from Turkish dual banking system. International Journal of Islamic and Middle Eastern Finance and Management, 10, 1108.

Ranjan, R., & Dhal, S. (2003). Non-Performing Loans and Terms of Credit of Public Sector Banks in India: An Empirical Assessment. Reserve Bank of India Occasional Papers, 24(3), 83-121.

Salas, V., & Saurina, J. (2002). Credit Risk in Two Institutional Regimes: Spanish Commercial and Savings Banks. Journal of Financial Services Research, 22, 203-224.

Touny, M.A., & Shehab, M.A. (2015). Macroeconomic Determinants of Non-Performing Loans : An Empirical Study Macroeconomic Determinants of Non-Performing Loans : An Empirical Study of Some Arab Countries. American Journal of Economics and Business Administration, 7, 11-22.

Us, V. (2017). Dynamics of non-performing loans in the Turkish banking sector by an ownership breakdown : The impact of the global crisis. Finance Research Letters, 20, 109–117.


International Research Journal of Business Studies has been covered by the following services:

Image result for university of Saskatchewan small logo