Abstract
The presence of Fintech has contributed to the changes in many industries in Indonesia. Among others, banking industry has been one of the most resilient to alterations and skeptical to disruption by Fintech. Using the data of banking industry covering national banks, regional banks, national private banks and foreign banks, from 2009 to 2019, this study aims to examine the impact of interest rate in pre-Fintech period compared to the impact in post-Fintech period. This study sets 2016 as the time threshold. Using panel data regression model, the findings suggest that the power of interest rate in changing the level of loans is lower in the post-Fintech than in the pre-Fintech.Additionally, in many cases, the power is even statistically insignificant in the post-Fintech. Reforms in banking loan regulation is necessary to respond to the presence of Fintech.
Highlights
Global economy has shown an increase in Financial Technology, so-called Fintech investment
3 Methodology and Results The data used in this study are taken from the statistics of several types of banks reported by Bank Indonesia
The interest rate variables are named after the purpose of the loans
Summary
Global economy has shown an increase in Financial Technology, so-called Fintech investment. The data cover total loan, production loan, consumption loan, agriculture loan, mining loan, industry loan, electricity loan, construction loan, trade loan, transportation loan, finance loan, working capital interest rate, investment interest rate and consumption interest rate from 2009 to 2019. This study employs basic Solow growth model to determine the impact of interest rate and technological change on the investment while assuming that the investment is made of loans from the bank.
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