Bank Indonesia's monetary easing in 2016, achieved by lowering the benchmark interest rate (BI Rate) and subsequently the BI 7-day Repo Rate, stimulated growth in non-bank financing. The credit interest rate fell by 62 basis points (YoY) to 12.21 percent in October 2016. This decrease in credit interest rates resulted in a 37.9 percent increase in the value of non-bank financing to Rp 166.9 trillion from Rp 129 trillion at the end of 2015.
The highest growth in non-bank financing throughout 2016 was recorded in the issuance of debt securities, namely medium-term notes (MTNs) and negotiable certificate of deposits (NCDs), which increased by 66.67 percent to Rp 33.5 trillion from Rp 20.1 trillion. Similarly, funding from stock listings and new share issuances in the capital market also grew by 50 percent. Meanwhile, bond issuance decreased by 6 percent compared to the end of 2015.
Corporate financing sources are not limited to bank loans; they can also be obtained from debt issuance, stock listings, new share issuances on the stock exchange, and bonds.
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