MALICHA AULIA ZATALINI: Meta-Analysis Bahasa Inggris

Productive Assets Quality At Bank

By :

Malicha Aulia Zatalini
24212401

Email : malichaauliaz@yahoo.com, malichaaz@gmail.com

Accounting Program of Study
Faculty of Economics, Gunadarma University

Abstract

Productive asset quality or earnings assets can be used as a benchmark to earn income, could be in the form of loans, securities, interbank placements, investments, commitments and contingencies in administrative accounts. Productive asset quality is very important to note because it can affect other factors or performance of the Bank. The purpose of this study was to determine the effect of productive asset quality (KAP) of the Bank. This study uses meta-analysis with empirical studies. This study integrates the results a study of five journals. Based on the results of the analysis showed that the bank has a small asset quality increasingly mend the effectiveness of the Bank's performance so that the revenue and profit generated is increasing. Meanwhile, the bank has a high asset quality showed unproductive financing the Bank's profitability will increase and the effect of non-performing loans will also increase will result in a loss of opportunity to earn income.

Introduction

Economic development show the public welfare in a country, a good economic development shows that welfare good and economic development of bad indicates bad welfare. Economic development involves the relationship of the various parties as determining the welfare of its people, one of which financial institutions in the country.

Financial institutions are very supportive in the process of economic development. The financial institution connects owners and users of funds. One financial institution is the Bank. Banks have an important role in a country . Bank as a regulator of the funds of a State. Banks also became an intermediary institution, an institution that can help smooth the payment system and as a means to implement government policy. To carry out its business, the Bank requires the ability and effectiveness of the Bank in managing credit risk and minimize potential losses that will occur so that banks are required to maintain asset quality and an allowance for uncollectible accounts.

Productive asset quality is a unit of Bank performance benchmarks that can be used as a criterion to get a revenue based on the collectibility of which is in the form of loans, securities, interbank placements, bill acceptances, bills of securities purchased under resale agreements, derivatives bill, investments, transactions and administrative accounts can be assessed on a monthly basis. One effort to maintain the asset quality is to adopt a policy of allocation of funds both in the economic sector, industry sector and marketing area.

Methodology

The method in this study using meta-analysis methods to the study of literature, which examines five themed journal on productive asset quality at Bank.

Discussion

a. Definition Bank

Bank has been around since the 1690s. The rapid development of the Bank originated from the days of empire early in Europe and Asia to the West which is developed by the merchants. Banking was first known from the royal currency exchange services and known as a foreign exchange trader (money changer).

Over time, banking in Indonesia is also growing rapidly. Amount of Banks in Indonesia has so much so that the government of Indonesia and Bank Indonesia established the Indonesian banking architecture or API to regulate the development and the number of banks in Indonesia.

According to the Act that set it, the Bank has a variety of definitions, namely :

Law Number 10 of 1998 , the Bank is a business entity which collects funds from the public in the form of savings and channel them to the public in the form of credit and or other forms so as to improve their lives.
Law Number 14 Year 1967 on the Principles of Banking, which meant financial institutions are all entities that rnelalui activities in financial withdraw money from the public and tersehut funnel money back into the community. Financial institutions extend credit to customers or invest in securities in the financial markets (financial market).
IAI Number 31 on Accounting for Banks, Banks are institutions that act as financial intermediaries (financial intermediary) between parties who have surplus funds (surflus units) with those who require funds (deficit units) as well as the institutions that serve traffic expedite payment.

Under the Act can be concluded, the Bank is a business entity that mediates between the people who have the money to those in need of money in order to improve the lives of its people become more prosperous.

b. Definition of Assets Quality

To get a good bank for the creation of good economic times as well, the Bank requires skills that can maintain the position well. These capabilities are the ability to manage money , keep the asset-quality assets, minimize the risk of loss.

Maintaining the quality of assets, productive assets are all the investment of funds in dollars and foreign currencies which are intended to earn income in accordance with its function (Siamat, 2004:135).

Productive assets is an asset in rupiah and foreign currency which owned banks with a view to earn income according to its function (Lukman Dendawijaya:2009).

According Totok Budisantoso and Sigit Triandaru in his book "Banks and Other Financial Institutions" second edition 2006 page 118, productive asset is all assets in rupiah and foreign currency held by banks with the intention obtain income in accordance with its function, credit is one form of productive assets.

According Taswan in his book "Accounting Banking" second edition 2005 page 245, productive assets (earning assets) is an investment bank funds both in rupiah and foreign currency in the form of loans, securities, interbank placements, inclusion, including commitments and contingencies in the administrative transactions.

According Slamat Dahlan in his book "Management of Financial Institutions" second edition 1999 page 94, assets or earning assets is all dollars and investment of funds in foreign currency that are intended to earn income in accordance with its function.

c. Summary Explanations

From the results reviewed journal, it can be seen brief explanations of the CAR, NIM, LDR, NPL, ROA, ROA, KAP and profitability, namely :

Capital Adequacy Ratio (CAR)

The capital adequacy ratio that shows the Bank's ability to maintain sufficient capital.

Net Interest Margin (NIM)

The ratio between of net interest income to Outstanding Credit. NIM show the ability of banks to generate interest income from the loan portfolio, given the Bank's operating income is highly dependent on the interest difference (spread) of the outstanding loans.

Loan to Deposit Ratio (LDR)

The ratio that indicates the level of a Bank's liquidity and ability intermediary function in channeling funds to the third party credit.

Non Performing Loans (NPL)

The ratio is used to measure the ability of Banks to cover the risk of loan repayment by the debtor.

Return on Assetsn (ROA)

Ratio shows the ability from capital invested in total assets to generate profits or other words to describe the productivity of the Bank.

Operating Expenses and Operating Income (BOPO)

The ratio comparison between of operating expenses with operating income. The ratio between the cost incurred by the Bank in carrying out its main activities against income derived from such activities.

Assets Quality (KAP)

Earning assets is the placement of the Bank in the form of credit, securities, investments and other plantings in order to gain income. Placement in these assets are largely in the form of credit which allows pose a risk.

Profibilitas

The ability of the company makes a profit in relation to sales, total assets and own capital. Profitability measures the rate of return of investment made by the company, either by using the total assets owned by the company or by using funds from the owner.

d. Summary Points

In addition to a summary explanation , it can be seen also a summary of the points results reviewed journals , among others :

CAR has a positive association with changes in earnings, meaning if the CAR increases, the profit generated will also increase so that the change in profit is also increased. This is due to an increase in the amount of their own capital, so that capital it self can be used to manage existing assets and asset turnover can improve corporate performance will also indirectly increase profits.
NIM has a positively associated with changes in earnings, which means that if the NIM ratio increases, the change in the profit generated will also increase.
LDR has a positive effect on earnings changes meaning if this ratio showed a high rate then the change in profit is also high and vice versa, it can be interpreted that if this ratio indicates a lower rate then the banks idle money or excess liquidity will lead to banks lose the opportunity to obtain greater profits.
NPL has a negative association with changes in earnings. If the NPL ratio increases, the profit generated will decrease, so the change in profit also fell, and vice versa.
The greater BOPO so will decrease the financial performance of banking. Vice versa, if the BOPO is getting smaller, it can be concluded that the Bank's financial performance has increased or improved.
The smaller the KAP that shows the effective performance of the Bank to suppress APYD and increase total earning assets that will increase revenue.
The higher of collectability productive assets, the greater the cost of provisioning to be set aside by the BPR.
The worse the quality of an asset, the greater the allowance reserve assets (PPAP) to be established, eg for bad debts.
A high ratio of the firm owned by a bank financing unproductive shows. Financing unproductive this causes high PPAP, PPAP which formed the greater will disrupt the profitability of Banks.
Effect of asset quality when increasing the profitability of Banks will increase.
The effect of increasing non-performing loans will result in the loss of opportunity to earn income or profitability for Banks.
Increased BOPO ratio shows the performance of the Bank's operations to generate revenues that have not been efficient which can impact on the profitability.
If the Banks are able to reduce the NPL ratio below 5%, the potential benefits to be gained will be greater because the Banks will save money that is needed to form the non-performing loan loss reserve or allowance for uncollectible accounts (PPAP).
The greater the ROA of a Bank, the greater the level of profit-making reached the Bank in terms of asset utilization.
Credit non performing can affect a bank's ability to obtain profitability, meaning that profitability will depend on the size of the credit crunch faced by the Bank.
The high non-performing loans and the allowance for uncollectible accounts prodiktif may affect the Bank to make a profit.

Conclusion

Based on the research results of asset quality or earnings can be used as a benchmark assets to generate revenue, can be in the form of loans, securities, interbank placements, investments, commitments and contingencies in administrative or transaction account and that it can be judged equivalent. Productive asset quality is very important to note because it can affect other factors or performance of the Bank. Banks that had productive assets quality which are smaller then the effectiveness of the Bank's performance is getting better so as to increase revenues, profits generated. Meanwhile, the bank has a high productive asset quality showed not productive so financing the Bank's profitability will increase and the effect of non-performing loans will also increase will result in a loss of opportunity to earn income.

Reference

http://www.mediabpr.com/kamus-bisnis-bank/kualitas_aktiva_produktif.aspx