Does Taxation And Macroeconomics Matter On The Profitability Of Indonesian Banking Sector Through Capital Structure Policy?

Author(s)

Yuli Teguh Hidayat ,

Download Full PDF Pages: 91-98 | Views: 334 | Downloads: 102 | DOI: 10.5281/zenodo.3463839

Volume 5 - January 2016 (01)

Abstract

This research aims to analysis whether the combination of taxation and macroeconomics will affect the profitability of Indonesian banking sector through capital structure policy. The result is expected to be able to develop alternative models that can be used as a reference for further research related to the increased profitability of banking companies, through tax planning in combination with capital structure decisions. Research on the effect of taxation policy for non-financial institutions have been found so many in the literature, while in the banking sectors are still rare. This study uses econometric models aimed to examine the effect of taxation against banking behaviour associated with the company's capital structure decisions and ultimately reflected in the ability of the company generates profitability. The interaction between taxation and variable macroeconomic conditions are simultaneous testing to test the effect of two variables on the capital structure and profitability of banks. Based on the results of test carried out partially on the impact of taxation and macroeconomics on capital structure showed that sub variable corporate income tax rate, dummy public, GDP, and BI Rate are significant. While, CKPN and Kurs are not significant. The results of test carried out partially on the impact on profitability showed that sub variable Capital Structure, Corporate Income Tax Rate, GDP and Kurs are significant. But, CKPN, Dummy Public and BI Rate are not significant. Therefore, the use of taxation as one instrument of fiscal policy has the function of budgetary and regulatory functions and it should be aligning with monetary policy.

Keywords

Taxation, Macroeconomics, bank capital structure, financial sector, econometric models 

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