Abstract
The first objective of this study is to determine whether the discretionary behavior is built by diversification or concentrated productive asset financing. Discretionary behavior reflects the value of additional losses to form Allowance for Loan Losses or ALL based on several management motivations. The formation of ALL aims to maintain the quality of productive assets and the health of banks. Discretionary behavior is estimated from the difference between the total ALL and the non-discretionary component presented through a portfolio of economic impairment. Specifically, the concentration of banking asset financing in this study is classified based on the type of loan. This study examines the effect of the concentration of asset financing on loan distribution toward discretionary behavior. This research was conducted in several commercial banks in Indonesia.
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