Journal article Open Access

Why Capital's Effect Differs in Bank Size?

Ahmad Aziz Putra Pratama

Sponsor(s)
Blue Eyes Intelligence Engineering & Sciences Publication (BEIESP)

Banks are trusted institutions. Therefore, bank management must use all of its operational tools to maintain the trust of the community. A strategic tool in sustaining that trust is adequate capital. Until now, banking activities remain the same, but with a different system. Novelty this research is a different effect of bank capital on lending behavior in each bank size category. This study used the fixed effect model in the 2004-2018 period. This study proved that smaller bank tends to implement aggressive strategies with lower capital and higher loan proportion, while larger bank manages to implement a defensive strategy with high capital and higher loan proportion. 

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