Data And Sample Data Sources Variable Measurement

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CHAPTER III METHODOLOGY

A. Data And Sample

The subjects of this research are all commercial banks in Indonesia over the period of 2005-2013. The overall numbers of samples in this study were 110 commercial banks, which the ownership structure is disentangled into five categories: State-owned banks, regional development banks, foreign and joint venture banks, domestic banks owned by foreign institutions and domestic banks owned by local institutions.

B. Data Sources

This research uses secondary data as a whole, gathered from Laporan Bank Umum LBU, which consist of financial data of 110 commercial banks in Indonesia, over the period of 2005-2013 in a monthly dataset. Finally, it results in 10,996 observations.

C. Variable Measurement

1. Dependent Variables The dependent variable can be defined as a variable which is affected by other variables. This study used Bank Performance and Risk Taking as dependent variables. Bank performance is measured by Return on Asset ROA and Return on Equity ROE. Return on Asset ROA refers to the measurement of the banks efficiency and effectiveness in generating profits through the utilization of the assets owned. Return on Equity ROE refers to the measurement the banks ability to generate profits through equity capital owned. Data associated with ROA and ROE are obtained from Laporan Bank Umum LBU in a monthly dataset. 1. Source : Brigham and Houston, 2009 2. Source : Brigham and Houston, 2009 The second dependent variable is Risk Taking which is measured by the value of Z-Score proposed by Boyd and Graham 1986, which indicates the probability of failure of a given bank. The higher value of Z-Score indicates the lower probabilities of failure. The data needed to calculate the value of Z-Score are obtained from Laporan Bank Umum LBU in a monthly dataset. 3. Source : Boyd and Graham, 1986 4. Source : Boyd and Graham, 1986 2. Independent Variables This study used bank ownership structure as independent variable. The ownership structure is divided into five categories: State-owned banks, regional development banks, foreign and joint venture banks, domestic banks owned by foreign institutions and domestic banks owned by local institutions. Data associated Indonesian Commercial Banks ownership structure is obtained from Laporan Bank Umum LBU in a monthly dataset. The ownership structure variable was analyzed with dummy variable. 3. Control Variable Control Variable is an unchangeable variable which is able to impact values. The analysis in this study is also considering the characteristics of the bank as a control variable, includes: bank size, bank leverage, and loan to deposit ratio. Table 3.1 Research Control Variables NO CONTROL VARIABLES MEASUREMENT 1 Bank Size Natural Logarithm of Total Asset LTA 2 EQTA Equity to Total Asset Ratio 3 Loan to Deposit Ratio LDR Total Credit Total Deposits Sources : Brigham, Houston, 2009

D. Data Analysis