Loan–Deposit Pressure, Broad Money Dynamics, and Banking Sector Risk in Indonesia

Abstract

This study explores the relationship between loan–deposit pressure, broad money dynamics, and banking sector risk in Indonesia during the period 2020–2024. The research adopts a quantitative-descriptive approach using aggregate annual data from official publications of Bank Indonesia and the World Bank. Loan–deposit pressure is measured as the ratio of total bank credit to total private deposits, while banking risk is represented by the capital adequacy ratio (CAR) and non-performing loans (NPL). Data processing and statistical analysis are conducted using R software to generate descriptive statistics, correlation measures, and a simple linear regression model. The findings indicate that Indonesia’s banking system maintained relatively stable funding and lending structures despite macroeconomic fluctuations. Correlation analysis shows a moderate association between MSME credit share and NPL, suggesting that higher exposure to productive inclusive lending slightly affects asset quality risk. However, the impact remains limited and does not threaten systemic stability. The results provide empirical support for macroprudential monitoring of intermediation balance and underline the importance of prudent portfolio management in emerging banking markets.