ANALYSIS THE EFFECT OF THE AVERAGE COLLECTION PERIOD AND MACROECONOMIC (INTEREST RATE AND EXCHANGE RATE) ON BANKING PROFITABILITY (NET INTEREST MARGIN) OF 3RD BOOK BANKING IN INDONESIA PERIOD 2010-2012 LISTED IN INDONESIA STOCK EXCHANGE

Abstract

This study has been carried out with the aim to find out the effect of Average Collection Period and Macroeconomic indicator: Interest Rate and Exchange Rate on the Net Interest Margin of 3rd Book Banking in Indonesia period 2010-2012 listed in Indonesia Stock Exchange. The study used the sample of 3 banks selected randomly from list bank that classified in the 3rd book and Foreign exchange banks for the period of three years ranging from 2010 to 2012. The Panel data regression analysis was used to examine the relationship of Average Collection Period, Interest Rate, and Exchange Rate with bank profitability measures: Net Interest Margin. The study found that the Average Collection Period of accounts receivables has negative relationship and significant partially effects to Net Interest Margin, otherwise Interest rate, and Exchange rate also have negative relationship but insignificant partially effect to Net Interest Margin. Many of the studies on Bank performance use ROA and ROE as the measurement of bank profitability but fewer are with reference to NIM (Net Interest Margin). This study will contribute to the literature by analyzing the impact of Average Collection Period, Interest Rate, and Exchange Rate with bank profitability measure by Net Interest Margin by validating the results of several journals and previous study.