Factors Affecting Conventional General Bank Capital Buffers In Indonesia

ABSTRACT: Capital Buffer is an additional capital buffer that serves to anticipate future losses due toexcessive bank financing or credit growth that has the potential to disrupt economic stability. This study aims todetermine the effect of cost of holding capital, cost of financial bankruptcy, adjustment costs, bank credit risk,and bank size on capital buffers. This research was conducted at conventional commercial banks in Indonesiaduring 2015-2018.The number of samples used in this study amounted to 12 companies with an observationperiod of 4 years. The analysis technique used is multiple linear regression analysis. The results showed that thecost of holding capital, adjustment costs, and bank size did not significantly influence the capital buffer, but thecost of bankruptcy and bank credit risk had a positive and significant effect on capital buffer.

Keywords: capital buffer, cost of holding capital, cost of financial bankruptcy, adjustment cost, bank creditrisk, bank size