ABSTRACT
Despite the main role of the Regional Development Bank (RDB), which is to increase the economic activity in each area, it is found that most Regional Development Banks in Indonesia distribute more consumer loans than business ones. This study aims to analyse several factors affecting both the business lending activity in general and the productive loans of the RDB. Using the panel random effect model, this research analysed 26 RDBs from 2001 until 2014. The result shows the differences in the variables affecting business lending activity between general and productive loans. The most prominent result obtained from this study is that regional productivity influences the lending of productive loans but not general loans. This means that, even though the role of the RDB in Indonesia as an agent of regional development is still limited, regional productivity can be used as a key factor to increase productive loans.
