ABSTRACT
This study aims to determine the influence of internal and external factors on bank liquidity in Indonesia. The measurement of liquidity in this study was done using two approaches, namely the ability of banks to meet the credit demand as measured by the assets to loans ratio (TA/TL), and the ability of banks to meet their obligations to depositors, measured by the liquid assets to deposits ratio (LA/Deposit). The study was conducted on a conventional commercial bank in Indonesia during the period from 2008-20014. This study used an unbalanced pool of data with 429 observations and used multiple linear regression analysis to determine the effect of internal and external factors on bank liquidity. The results of the analysis showed that capital adequacy, cost to income, the interest rate of JIBOR and GDP had a positive effect, but funding costs and credit risk had a negative effect on the bank’s liquidity (TA/ TL ratio). Capital adequacy, inflation and GDP growth had a positive effect, but funding cost, costs to income ratio and credit risk rate had a negative effect on the bank’s liquidity (LA/Deposit).
