DETERMINAN PENDALAMAN SEKTOR KEUANGAN (FINANCIAL DEEPENING) DI INDONESIA

This research aim to analyze the factors that influence the financial deepening in Indonesia. Dependent variable in this research is financial deepening that is taken from the ratio of M2 to GDP, whereas the independent variables include Rupiah Exchange Rate, BI Rate, Trade Openness, Indonesia Composite Index, Third Party Funds, and Sukuk. The type of data in this research is secondary data in timeseries from January 2011 to December 2019 which are sourced from the Central Statistic Agency, The Financial Services Authority, Bank Indonesia (BI), Indonesia Stock Exchange (IDX) and the World Bank. This research use Vector Error Correction Model (VECM) analysis method. The VECM estimation results show that the effect of the rupiah exchange rate and the BI Rate on financial deepening in Indonesia in the short term is a significant positive but in the long run it has a significant negative effect. The effect of the Indonesia Composite Index on financial deepening in Indonesia in the short and long term are negative and significant. Trade openness and corporate sukuk in the short and long term have a significant positive effect on financial deepening in Indonesia. The effect of the third party funds on financial deepening in Indonesia in the short term is a significant positive