Increase credit availability

Oct 13, 2025 by windailys.com 133 views

Introduction

Public consumption expenditure is a crucial component of the economy, particularly in North Sumatra Province, where household consumption contributes approximately 60% of the Gross Regional Domestic Product (GRDP). The level of consumption of the community is influenced by various factors, both from a macro and micro perspective. This study aims to analyze the effect of several macro variables, including GRDP, population, number of consumption loans, and consumption credit interest rates on community consumption expenses in regencies/cities in North Sumatra Province.

Background

North Sumatra Province is one of the provinces in Indonesia with a significant contribution to the country's economy. The province's economy is driven by various sectors, including agriculture, manufacturing, and services. Household consumption is a vital component of the province's economy, accounting for around 60% of the GRDP. The level of consumption of the community is influenced by various factors, including macro variables such as GRDP, population, number of consumption loans, and consumption credit interest rates.

Methodology

This study uses public consumption expenditure as the dependent variable, while independent variables include GRDP, population, number of consumption loans, and consumption credit interest rates. The data used is sourced from the Central Statistics Agency of North Sumatra Province and the Medan Bank Indonesia Office, with an observation period from 2002 to 2009. The analysis was carried out using the Random Effect Model (Rem) with the Generalized Least Square (GLS) estimation method to obtain more accurate results.

Results

The results of this study show that the GRDP variable, population, and the amount of consumption credit have a positive and significant influence on public consumption expenditure. This means that the higher the GRDP and population, as well as the more consumer loans available, the public consumption expenditure will also increase. Conversely, the consumption credit interest rate shows a significant negative effect, which means that the higher the interest rate, the consumption expenditure will tend to decrease.

Discussion

The results of this study indicate that all independent variables have a real influence on public consumption expenditure. In the context of Regency/City in North Sumatra Province, Langkat Regency shows the highest level of consumption expenditure, while Asahan Regency has the lowest level of consumption expenditure. This can be a consideration for local governments in formulating economic policies that aim to improve the welfare of the community through increasing consumption.

Implications

By understanding the effect of macro variables on public consumption expenditure, policy makers can be more effective in designing development programs that can support economic growth and improve the quality of life of the population. Credit availability and fiscal policies that encourage economic growth are the main keys that must be considered to increase public consumption in this province. Further analysis of consumer behavior and other factors that can affect consumption also needs to be done to get a more complete picture of economic dynamics in North Sumatra.

Conclusion

Understanding the interaction between macro variables and public consumption expenditure is a strategic step in creating policies that are responsive to the needs and potential of the region. This study provides valuable insights into the factors that influence public consumption expenditure in North Sumatra Province, which can be used to inform policy decisions and improve the welfare of the community.

Recommendations

Based on the findings of this study, the following recommendations are made:

Increase credit availability: Local governments should consider increasing credit availability to support economic growth and improve the quality of life of the population.
Fiscal policies: Fiscal policies that encourage economic growth should be implemented to increase public consumption in the province.
Further analysis: Further analysis of consumer behavior and other factors that can affect consumption should be done to get a more complete picture of economic dynamics in North Sumatra.

Limitations

This study has several limitations, including:

Data availability: The data used in this study is sourced from the Central Statistics Agency of North Sumatra Province and the Medan Bank Indonesia Office, which may not be comprehensive or up-to-date.
Methodology: The analysis was carried out using the Random Effect Model (Rem) with the Generalized Least Square (GLS) estimation method, which may not be the most appropriate method for this study.
Scope: This study only focuses on the effect of macro variables on public consumption expenditure in North Sumatra Province, which may not be generalizable to other regions.

Future Research Directions

This study provides a foundation for further research on the factors that influence public consumption expenditure in North Sumatra Province. Future research directions include:

Consumer behavior: Further analysis of consumer behavior and other factors that can affect consumption should be done to get a more complete picture of economic dynamics in North Sumatra.
Micro variables: The effect of micro variables, such as income, education, and employment, on public consumption expenditure should be analyzed.
Regional differences: The effect of macro variables on public consumption expenditure in different regions of North Sumatra Province should be analyzed.
Frequently Asked Questions (FAQs) on the Influence of Macro Variables on the Consumption of District/City Community in North Sumatra Province ===========================================================

Q: What are macro variables and how do they affect public consumption expenditure?

A: Macro variables refer to large-scale economic factors that can influence public consumption expenditure. In this study, the macro variables analyzed include GRDP, population, number of consumption loans, and consumption credit interest rates. These variables can affect public consumption expenditure by influencing the availability of credit, the level of economic activity, and the purchasing power of consumers.

Q: What is the significance of GRDP in influencing public consumption expenditure?

A: GRDP is a key macro variable that can influence public consumption expenditure. A higher GRDP can indicate a stronger economy, which can lead to increased consumer spending and higher public consumption expenditure. Conversely, a lower GRDP can indicate a weaker economy, which can lead to decreased consumer spending and lower public consumption expenditure.

Q: How does population affect public consumption expenditure?

A: Population is another important macro variable that can influence public consumption expenditure. A larger population can lead to increased consumer spending and higher public consumption expenditure, as there are more people with the potential to consume goods and services. Conversely, a smaller population can lead to decreased consumer spending and lower public consumption expenditure.

Q: What is the role of consumption credit in influencing public consumption expenditure?

A: Consumption credit is a type of credit that is specifically designed for consumer spending. The availability of consumption credit can influence public consumption expenditure by providing consumers with access to credit, which can enable them to purchase goods and services that they may not have been able to afford otherwise.

Q: How does consumption credit interest rate affect public consumption expenditure?

A: The consumption credit interest rate can have a significant impact on public consumption expenditure. A higher interest rate can make it more expensive for consumers to borrow money, which can lead to decreased consumer spending and lower public consumption expenditure. Conversely, a lower interest rate can make it cheaper for consumers to borrow money, which can lead to increased consumer spending and higher public consumption expenditure.

Q: What are the implications of this study for policy makers?

A: The findings of this study have important implications for policy makers. By understanding the effect of macro variables on public consumption expenditure, policy makers can design development programs that can support economic growth and improve the quality of life of the population. Credit availability and fiscal policies that encourage economic growth are key factors that must be considered to increase public consumption in North Sumatra Province.

Q: What are the limitations of this study?

A: This study has several limitations, including the availability of data, the methodology used, and the scope of the study. The data used in this study is sourced from the Central Statistics Agency of North Sumatra Province and the Medan Bank Indonesia Office, which may not be comprehensive or up-to-date. The analysis was carried out using the Random Effect Model (Rem) with the Generalized Least Square (GLS) estimation method, which may not be the most appropriate method for this study. The study only focuses on the effect of macro variables on public consumption expenditure in North Sumatra Province, which may not be generalizable to other regions.

Q: What are the future research directions for this study?

A: This study provides a foundation for further research on the factors that influence public consumption expenditure in North Sumatra Province. Future research directions include analyzing the effect of micro variables, such as income, education, and employment, on public consumption expenditure, and examining the effect of macro variables on public consumption expenditure in different regions of North Sumatra Province.