The effects of credit and labor on economic growth in Indonesia
List of Authors
  • Aliasuddin, Srinita , Ikram Khairun

Keyword
  • productive credit, consumptive credit, economic growth, Indonesia

Abstract
  • This study examines the effect of productive credit, consumptive credit, and the effective employment ratio on economic growth in Indonesia. The data used is time series data in the form of the quarter 2001Q2 – 2021Q4, and the ARCH (Autoregressive Conditional Heteroskedasticity) method is used to estimate the model in this study. The estimation results show that the consumptive credit variable and the effective labor ratio influence economic growth, while productive credit does not. It is hoped that the government can increase the allocation of credit, especially consumer credit in Indonesia, so that this credit can increase economic growth in Indonesia and also for practitioners in banking to evaluate the use of credit so that it is right on target so that this credit can optimize economic growth in Indonesia.

Reference
  • 1. Ananzeh, I. E. N. (2016). Relationship between Bank Credit and Economic Growth: Evidence from Jordan. International Journal of Financial Research, 7(2). https://doi.org/10.5430/ijfr.v7n2p53

    2. Banu, I. M. (2013). The impact of credit on economic growth in the global crisis context. Procedia Economics and Finance, 6, 25-30. https://doi.org/10.1016/S2212-5671(13)00109-3

    3. Basmar, E., Muhammad, Y. Z., & Marsuki, A. H. (2017). Do the bank credit cause the financial crisis in Indonesia. Scientific Research Journal, 5, 36-38. From: http://www.scirj.org/papers-1017/scirj-P1017446.pdf

    4. Bui, T. N. (2020). Domestic credit and economic growth in ASEAN countries: A nonlinear approach. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies, 11(2), 1-9. https://doi.org/10.14456/ITJEMAST.2020.34

    5. Camba Jr, A. C., & Camba, A. L. (2020). The dynamic relationship of domestic credit and stock market liquidity on the economic growth of the Philippines. The Journal of Asian Finance, Economics and Business, 7(1), 37-46. https://doi.org/10.13106/jafeb.2020.vol7.no1.37

    6. Duican, E. R., & Pop, A. (2015). The implications of credit activity on economic growth in Romania. Procedia Economics and Finance, 30, 195-201. https://doi.org/10.1016/S2212-5671(15)01286-1

    7. Gozgor, G. (2015). Causal relation between economic growth and domestic credit in the economic globalization: Evidence from the Hatemi-J's test. The Journal of International Trade & Economic Development, 24(3), 395-408. http://dx.doi.org/10.1080/09638199.2014.908325

    8. Guerra, E. A. R. (2017). The economic growth and the banking credit in Mexico: Granger causality and short-term effects, 2001Q1–2016Q4. Economía Informa, 406, 46-58. https://doi.org/10.1016/j.ecin.2017.10.004

    9. J.Cao., Ho, Mun S., Hu, Wenhao., & Jorgenson, Dale. (2020). Effective labor supply and growth outlook in China. China Economic Review, 61(2020)101398. https://doi.org/10.1016/j.chieco.2019.101398

    10. Krishnankutty, R. (2011). Role of banks credit in economic growth: A study with special reference to North East India. The Economic Research Guardian, 1(2), 60-71. From: https://www.academia.edu/download/74483819/Role_of_Banks_Credit_in_Economic_Growth_20211110-29935-bnz84i.pdf

    11. Mondragon, J. (2018). Household credit and employment in the Great Recession. Kilts Center for Marketing at Chicago Booth–Nielsen Dataset Paper Series, 1-025. From: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2521177

    12. Nwakanma, P. C., Nnamdi, I. S., & Omojefe, G. O. (2014). Bank credits to the private sector: potency and relevance in Nigeria’s economic growth process. Accounting and Finance Research, 3(2), 1-23. https://doi.org/10.5430/afr.v3n2p23

    13. Sassi, S., & Gasmi, A. (2014). The effect of enterprise and household credit on economic growth: new evidence from European union countries. Journal of Macroeconomics, 39, 226-231. https://doi.org/10.1016/j.jmacro.2013.12.001

    14. Sharipov, I. (2015). Contemporary economic growth models and theories: A literature review. CES Working Papers, 7(3), 759.

    15. Jajri, Idris., & Ismail, Rahmah. (2010). Impact of labour quality on labour productivity and economic growth. African Journal of Bussiness Management, 4(4), 486–495. From: https://www.researchgate.net/publication/229052871_Impact_of_labour_quality_on_labour_productivity_and_economic_growth

    16. Narayan, P. K., & Narayan, S. (2013). The short-run relationship between the financial system and economic growth: New evidence from regional panels. International Review of Financial Analysis, 29, 70–78. https://doi.org/10.1016/j.irfa.2013.03.012

    17. Thierry, B., Jun, Z., Eric, D. D., Yannick, G. Z. S., & Landry, K. Y. S. (2016). Causality relationship between bank credit and economic growth: evidence from a time series analysis on a vector error correction model in Cameroon. Procedia - Social and Behavioral Sciences, 235, 664–671. https://doi.org/10.1016/j.sbspro.2016.11.061

    18. Wulandari, D., Utomo, S. H., & Narmaditya, B. S. (2020). The relationship between economic growth and macroeconomic indicators in Indonesia. Journal of International Studies, 13(2). From: https://www.ceeol.com/search/article-detail?id=979986

    19. Yakubu, Z., & Affoi, A. Y. (2014). An analysis of commercial banks’ credit on economic growth in Nigeria. Current Research Journal of Economic Theory, 6(2), 11-15. From: https://pdfs.semanticscholar.org/cdd7/82bd357c6b43226e3c33e7709683b4516f94.pdf