RESULTS Description of Variables

4. RESULTS Description of Variables

The index value characteristic of the debtor produces a value of 67.0 which is in the range> from 40.00 to

70.00 in the category medium, which means a factor of character possessed by the debtor has been good. Descriptive analysis shows that in fact the respondent has a character include responsibility, honesty, openness and good faith

The index value of Financial Condition debtor variable yield value of 66.9 which is in the range> from 40.00 to 70.00, which means that financial factors are owned by the debtor has been good. Descriptive analysis shows that in fact the respondent has the ability to make profits in the business, ability to manage the business, marketing strategy, and calculation of the cost of his life, the number of children and dependents were quite good

The result of the calculation of the index value of the variable risk of default resulted in a value of 44.1 which is in the range> from 40.00 to 70.00, which means that the default risk experienced by banks included in the low category. Referring to the results of the descriptive analysis provided information that turned out to be the default risk caused by the poor timeliness of payments, low credit unsettled, too optimistic .

Evaluation of measurement (outer) models Validity An indicator declared invalid if it has a loading factor above 0.5 to construct the destination. Table 1 shows

that the loading factor value that is above the recommended value of 0.5. The smallest value is equal to 0,692 for 4 KAD indicators that goodwill. Means the indicators used in the study is valid or has met the convergent validity

Table 1: RESULT FOR OUTER LOADING

KAD KD

RGB

KAD1 0.779 KAD2 0.697

KAD3 0.761 KAD4 0.692

KD1

KD2

KD3

KD4

RGB1

RGB2

RGB3

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Here is a diagram loading factor of each indicator in the research model:

Figure 2: LOADING FACTOR

Furthermore, reflective indicators also need to be tested by cross loading discriminant validity as follows:

Table 2: RESULT FOR CROSS LOADING

KAD1 0.779 0.237 -0.373 KAD2 0.697 0.295 -0.372 KAD3 0.761 0.284 -0.317 KAD4 0.692 0.180 -0.244 KD1

RGB1 -0.433 -0.291 0.798 RGB2 -0.424 -0.203 0.817 RGB3 -0.272 -0.248 0.754

An indicator declared invalid if it has the highest loading factor to construct the intended loading factor compared to other constructs. Table 2 shows that the loading factor for KD indicators (KD1 until KD4) has a loading factor to construct KD higher than with the other constructs . This means that the indicator on the block KD predict them better than the indicator in the other blocks. Another method to see the discriminant validity is to look at Roat square value of average variance. The recommended value is above 0.5. Here is the values AVE in the research:

Table 3: AVERAGE VARIANCE EXTRACTED (AVE)

Average variance extracted (AVE) KAD 0.538 KD

0.592 RGB 0.624

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The table above gives the AVE value above 0.5 for all constructs contained in the research model. The lowest value AVE is equal to 0.538 in the construct of KAD (character debtor).

Reliability

Reliability testing is done by looking at the value of the block of composite reliability indicator that measures the construct. The results will show the value of composite reliability, satisfactory if above 0.7. The following are the composite reliability values inthe output

Table 4: COMPOSITE RELIABILITY

Composite Reliability KAD 0.823 KD

0.853 RGB 0.833

The table shows that the composite reliability for all constructs is above 0.7 indicating that all construct the model estimated meet the criteria of discriminant validity. The composite value of the low reliability was 0.823 in the construct of KAD (character Borrower)

Testing structural model (Inner Model) Once the model is estimated to meet criteria outer model, the subsequent testing of structural models (inner

model). Here is the value of R square on the construct

Table 5: R-SQUARE

R-square KAD KD

0.141 RGB 0.252

The table gives the value of 0.141 to construct KD (debtor's financial condition) which means that KD is able to explain the variance KAD (Character debtor) of 14.1%. Rated R is also available in RGB (Default Risk) is affected by KAD (Character debtor) and KD (the debtor's financial condition) that is equal to 25.2%. Testing with the following hypotheses were as follows:

Table 6: HIPOTESIS TESTING

original

mean of

sample

subsample Standard

Accepted KAD -> RGB

Accepted KD -> RGB

The table shows that the relationship between the RGB KAD is statistically significant with t - amounted to 3.158 (> 1.96). The original value estimate sample was negative in the amount of -0380 which indicates that the direction of the relationship between KAD and RGB is negative. Thus the hypothesis H1 in this study that states that the KAD

The relationship between KAD with KD is statistically significant with t - amounted to 8.434 (> 1.96). The original value estimate sample was positive in the amount of 0.375 which indicates that the direction of the relationship between KAD and KD are positive. Thus the hypothesis H2 in this study that states that the KAD significant effect on KD accepted

The relationship between KD with RGB is not significant by statistical T- amounted to 1.526 (1.96). The original value estimate sample was positive in the amount of -0.215 which indicates that the direction of the relationship between KD and RGB is a significant negative. Thus the hypothesis H3 in this study that states that KD significant effect on RGB rejected

Here is a diagram based on the output value of T statistics with bootstrapping is done SmartPLS

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Figure 3: OUTPUT BOOTSTRAPPING

5. CONCLUSION, IMPLICATION AND LIMITATION Conclusion

The results showed that the variable character of the debtor does indeed affect the risk of default on the loan in the form of consumer loans, which was developed by Bank Mandiri. Characters debtor indicated through a sense of responsibility for the credit is granted, the debtor's honesty could explain the condition of its business, the openness of the development effort, and in good faith to repay the loan was instrumental in the risk of default. This means that the good character of the debtor, the lower the risk of default

The debtor's financial condition variable of the study showed no effect on the risk of default. A variable debtor's financial condition indicated by debt rose very sharply, increasing debt is not balanced by an increase in assets, net income decreased, the ability to manage the business, does not guarantee the immediate debtor to make payments on time .

Variable character debtor proved positive and significant effect on the financial condition variable. This means that if a good character, then the logic of the debtor will manage finances better / be careful, so if you have an obligation to be justified debtor will keep it .

Theoretical implications

The results of this study suggest that the hypothesis 1 supports the research of Widayanthi (2012) showed that the characteristics of the customer prove to affect the level of loan repayment. The results of research related to the third hypothesis reject research conducted by Suhardjono (2001) that the risk of default of the debtor may be caused, among others: debt increased sharply, rising debt unbalanced and research. Ika (2011) explains that the lifestyle factors, especially information from the marketer has touched the psychological aspects of consumers, this has resulted in people are driven to make a purchase and not out of necessity but desire factor, prestige, dignity, following the style of others, and so on. This is done continuously and if not controlled will lead to decreasing quality of finance . Declining financial quality leads to the risk of default. The results of the study support the hypothesis 2 Sinkey (2002) which states that the character affect the willingness and ability of debtors to pay.

Managerial implications

In granting the credit must still consider these two factors, namely by taking into account the precautionary principle with a lot of character into account factors debtor.

Research limitations.

Limitations found in this study is to construct the value of KD 0141 (the financial condition of the debtor), which means that KD is able to explain the variance KAD (Character debtor) of 14.1%. Rated R is also available in RGB (Default Risk) is affected by KAD (Character debtor) and KD (the debtor's financial condition) that is equal to 25.2%.

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Future Research Agenda

Referring to the limitations found in this study, it is recommended to be done in future research, namely the existence of other variables, especially in implementing lending principles, referred to as "5C" e.g. collateral, condition and capital