Analysis of Factors that Influence the Demand for Time Deposits in Commercial Banks in Indonesia

Oct 13, 2025 by miodeya.com 81 views

Analysis of Factors that Influence the Demand for Time Deposits in Commercial Banks in Indonesia

Introduction

The demand for time deposits in commercial banks in Indonesia is influenced by various factors, including economic indicators, interest rates, and exchange rates. Understanding these factors is crucial for banks to design products and marketing strategies that meet the needs of their customers. This study aims to identify and analyze the effect of various factors on the demand for time deposits at commercial banks in Indonesia, with a focus on three key variables: Gross Domestic Product (GDP), Deposit Interest Rates, and Exchange Rates.

Methodology

The data used in this study began in the first quarter of 2009 to the fourth quarter of 2018. The methodology applied was quantitative descriptive, using secondary data obtained from various official sources, including Bank Indonesia, Central Statistics Agency, and Financial Services Authority. The analysis was carried out using multiple linear regression methods through EViews 10 software.

Results

The results of the study showed that the three independent variables - the interest of deposit, GDP, and exchange rate - simultaneously had a significant influence on the demand for time deposits. Interestingly, the analysis shows that the influence of the combined three variables reached 96.67%, illustrates that almost all of these external factors contribute to customer decisions to place their funds in the form of time deposits.

In-Depth Analysis

1. Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is an important indicator that reflects the economic power of a country. When GDP increases, this generally indicates good economic growth, which tends to increase public confidence in saving. Increased GDP is also often accompanied by an increase in people's income, which can increase their ability to store money in the form of futures deposits. Conversely, if GDP has decreased, this tends to reduce people's purchasing power and demand for time deposits.

The relationship between GDP and time deposit demand can be explained by the following:

Positive relationship: When GDP increases, people's income also increases, which can lead to an increase in time deposit demand.
Negative relationship: When GDP decreases, people's purchasing power also decreases, which can lead to a decrease in time deposit demand.

2. Deposit Interest Rates

Deposit interest rates are costs paid by banks to customers for funds deposited in the form of deposits. The higher the deposit interest rate, the greater the incentives given to customers to invest their money. Therefore, there is a positive relationship between interest rates and deposit demand. If interest rates increase, customers will tend to choose time deposit products to maximize the benefits of their deposits.

The relationship between deposit interest rates and time deposit demand can be explained by the following:

Positive relationship: When deposit interest rates increase, customers are more likely to choose time deposit products to maximize their benefits.
Negative relationship: When deposit interest rates decrease, customers are less likely to choose time deposit products.

3. Exchange Rate

The exchange rate or currency exchange rate also has a significant effect on deposit demand. If the exchange rate of a currency is strong, this increases people's purchasing power and strengthens the decision to save in the form of futures deposits. Conversely, unstable exchange rate fluctuations can create economic uncertainty, which can reduce public interest to place funds in the form of deposits.

The relationship between exchange rates and time deposit demand can be explained by the following:

Positive relationship: When the exchange rate is strong, people's purchasing power increases, which can lead to an increase in time deposit demand.
Negative relationship: When the exchange rate is unstable, economic uncertainty increases, which can lead to a decrease in time deposit demand.

Conclusion

Growth in time deposit demand in commercial banks in Indonesia is strongly influenced by a combination of economic variables, which are interrelated. Understanding these factors is very important for banks in designing products and marketing strategies that are in accordance with market needs. This study emphasizes the importance of supervision of macroeconomic changes, especially in monetary policy planning and bank liquidity management strategies. With this information, financial service providers can better predict demand and respond to customer needs in the future.

Recommendations

Based on the findings of this study, the following recommendations are made:

Banks should design products and marketing strategies that take into account the influence of GDP, deposit interest rates, and exchange rates on time deposit demand.
Banks should monitor macroeconomic changes and adjust their strategies accordingly to meet the needs of their customers.
Financial service providers should use multiple linear regression methods to analyze the effect of various factors on time deposit demand.

Limitations

This study has several limitations, including:

The data used in this study is limited to the period from 2009 to 2018.
The study only focuses on three key variables: GDP, deposit interest rates, and exchange rates.
The study does not consider other factors that may influence time deposit demand, such as inflation rates and government policies.

Future Research Directions

Future research should focus on the following areas:

Investigating the effect of other factors on time deposit demand, such as inflation rates and government policies.
Analyzing the impact of macroeconomic changes on time deposit demand in different countries.
Developing a more comprehensive model that takes into account the interrelationship between various factors that influence time deposit demand.
Frequently Asked Questions (FAQs) about the Analysis of Factors that Influence the Demand for Time Deposits in Commercial Banks in Indonesia

Q: What is the main objective of this study?

A: The main objective of this study is to identify and analyze the effect of various factors on the demand for time deposits at commercial banks in Indonesia, with a focus on three key variables: Gross Domestic Product (GDP), Deposit Interest Rates, and Exchange Rates.

Q: What are the key findings of this study?

A: The key findings of this study are that the three independent variables - the interest of deposit, GDP, and exchange rate - simultaneously have a significant influence on the demand for time deposits. The analysis shows that the influence of the combined three variables reached 96.67%, illustrating that almost all of these external factors contribute to customer decisions to place their funds in the form of time deposits.

Q: What is the relationship between GDP and time deposit demand?

A: The relationship between GDP and time deposit demand is positive. When GDP increases, people's income also increases, which can lead to an increase in time deposit demand. Conversely, when GDP decreases, people's purchasing power also decreases, which can lead to a decrease in time deposit demand.

Q: What is the relationship between deposit interest rates and time deposit demand?

A: The relationship between deposit interest rates and time deposit demand is positive. When deposit interest rates increase, customers are more likely to choose time deposit products to maximize their benefits. Conversely, when deposit interest rates decrease, customers are less likely to choose time deposit products.

Q: What is the relationship between exchange rates and time deposit demand?

A: The relationship between exchange rates and time deposit demand is positive. When the exchange rate is strong, people's purchasing power increases, which can lead to an increase in time deposit demand. Conversely, when the exchange rate is unstable, economic uncertainty increases, which can lead to a decrease in time deposit demand.

Q: What are the implications of this study for commercial banks in Indonesia?

A: The implications of this study for commercial banks in Indonesia are that they should design products and marketing strategies that take into account the influence of GDP, deposit interest rates, and exchange rates on time deposit demand. Banks should also monitor macroeconomic changes and adjust their strategies accordingly to meet the needs of their customers.

Q: What are the limitations of this study?

A: The limitations of this study are that the data used is limited to the period from 2009 to 2018, and the study only focuses on three key variables: GDP, deposit interest rates, and exchange rates. The study does not consider other factors that may influence time deposit demand, such as inflation rates and government policies.

Q: What are the future research directions for this study?

A: The future research directions for this study are to investigate the effect of other factors on time deposit demand, such as inflation rates and government policies. Additionally, the study can be extended to analyze the impact of macroeconomic changes on time deposit demand in different countries. A more comprehensive model that takes into account the interrelationship between various factors that influence time deposit demand can also be developed.

Q: What are the practical implications of this study for financial service providers?

A: The practical implications of this study for financial service providers are that they should use multiple linear regression methods to analyze the effect of various factors on time deposit demand. Financial service providers should also monitor macroeconomic changes and adjust their strategies accordingly to meet the needs of their customers.

Q: What are the policy implications of this study for the government of Indonesia?

A: The policy implications of this study for the government of Indonesia are that they should consider the influence of GDP, deposit interest rates, and exchange rates on time deposit demand when designing monetary policy and bank liquidity management strategies. The government should also monitor macroeconomic changes and adjust their policies accordingly to meet the needs of the banking sector.