COLLECTIBILITY ANALYSIS FOR SMALL AND MEDIUM ENTERPRISES – BANK BUKOPIN CASE
By Mega Pratiwi NIM : 19007097
Undergraduate Program School of Business and Management Institut Teknologi Bandung 2010
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VALIDATION PAGE
COLLECTIBILITY ANALYSIS FOR SMALL AND MEDIUM ENTERPRISE – BANK BUKOPIN CASE
By Mega Pratiwi ID No: 19007097
Undergraduate Program School of Business and Management Institut Teknologi Bandung
August, 2010 Validated By
Deddy P. Koesrindartoto NIP : 132 327 713 vi
COLLECTIBILITY ANALYSIS FOR SMALL AND MEDIUM ENTERPRISE -BANK BUKOPIN CASE MEGA PRATIWI 19007097 Examination Date : August 3rd, 2010 Graduation Date : October 23rd, 2010 Undergraduate of Business and Management Program, Institut Teknologi Bandung 2010 Final Project Advisor : Deddy P. Koesrindartoto, Ph.D
ABSTRACT In Indonesia, small and medium enterprises (SME) has experienced 68% growth in 2008 and 47% growth in 2007. Its simple structure has made it able to respond quickly to changing economic conditions and meet local customers’ needs. Unfortunately, lack of access to finance has been cited as an important problem for SMEs, being the constraint in the creation, development or diversification of their economic activities. For avoiding this risk, lending institution such as banks usually conduct an intensive assessment (usually called credit scoring) to find the creditworthiness of an applicants. Bank Bukopin as a financial institution that is really supportive to the development of SME through its loan program, has also already implemented a computerized system to score the credit rating of its debtors using several variables which have been weighted by certain scoring proportion. The output of the system is somehow not representing the real credit score for the particular debtor due to the involvement of several judgmental (thus, subjective) valuation from the credit or account officer. This condition raises the urgency of a model creation for predicting future loan collectability that is really representative. This paper, “Collectability Analysis for Different Loan Plafond in Small and Medium Enterprise”, is purposed for creating appropriate credit scoring model to support the judgmental analysis approach in small and medium enterprise, finding out how financial, management structure and quality, business environment, credit facility, collateral characteristic, guarantee existence(based on the loan plafond, and legality aspect of the business affect the collectability of the debtors from different plafond level (< Rp 500 million and >Rp 500 million) , and providing early detector for the bank to predict about future loan performance of its debtor, thus the bank can be more careful in selecting qualified debtors. In the analysis part, it can be found that generic variables are significantly less influential compared to business/plafond-specific variables in predicting the loan collectability level. For high loan plafond, industry type, experience/competence, account mutation activity, liquidity ratio, and market share, reputation/integrity, supplier concentration, foreign exchange exposure, business prospect, social politic factors, marketing coverage and loan period are the significant predictors of the coll level. Key Words : Small and Medium Enterprises, Credit Rating, Loan Plafond, Collectability, Generic Variables, Plafond-Specific Variables. vii
COLLECTIBILITY ANALYSIS FOR SMALL AND MEDIUM ENTERPRISE -BANK BUKOPIN CASE MEGA PRATIWI 19007097 Examination Date : August 3rd, 2010 Graduation Date : October 23rd, 2010 Undergraduate of Business and Management Program, Institut Teknologi Bandung 2010 Final Project Advisor : Deddy P. Koesrindartoto, Ph.D
ABSTRAKSI Di Indonesia, usaha kecil dan menengah (UKM) telah mengalami pertumbuhan sebesar 68% di 2008 dan 47% di 2007. Struktur organisasinya yang sederhana membuatnya mampu merespon secara cepat terhadap perubahan kondisi ekonomi dan memenuhi kebutuhan pasar local. Sayangnya, keterbatasan akses pendanaan disebutkan sebagai masalah penting bagi UKM yang menjadi penghalang dalam penciptaan, pembangunan, atau perluasan aktivitas ekonomi mereka. Untuk menghindari resiko ini, institusi yang memberikan pinjaman seperti bank biasanya melakukan penilaian mendalam (penilaian kredit) untuk menentukan level kredibilitas calon debitor. Bank Bukopin, sebagai salah satu institusi keuangan yang sangat mendukung pengembangan UKM melalui penyediaan berbagai fasilitas pinjaman, juga telah mengimplementasikan sistem yang terkomputerisasi untuk menilai rating kredit dari seorang debitor menggunakan berbagai variabel yang masing-masing telah diberi bobot tertentu. Output dari sistem ini terkadang kurang merepresentasikan level kredibilitas yang sesungguhnya dikarenakan adanya berbagai penilaian subjetif dari account officer dalam beberapa variabel. Karen itulah diperlukan adanya model yang representatif untuk memprediksi tingkat kolektabilitas kredit di masa depan. Makalah “Collectability Analysis for Different Loan Plafond in Small and Medium Enterprise” ditujukan untuk menjelaskan penciptaan model penilaian kredit untuk mendukung analisis dengan pendekatan judgmental di UKM, menemukan korelasi antara kondisi keuangan, struktur dan kualitas manajemen, lingkungan bisnis, fasilitas kredit, karakteristik kolateral, garansi dari pihak ketiga dan aspek legalitas dengan kolektabilitas kredit debitor, serta menjadi alarm bagi bank untuk lebih bijak dan selektif dalam memilih debitur yang pantas didanai. Di bagian analisis, dapat dilihat bahwa variabel tetap tidak begitu representatif dibandingkan variabel khusus (berdasarkan plafond atau tipe bisnis) dalam memprediksi coll status. Secara khusus, kolektabilitas kredit untuk plafond tinggi (lebih dari Rp 500 juta) terbukti dapat diprediksi dengan menggunakan variabel sebagai berikut : tipe industri, pengalaman/kompetensi, mutasi kredit, rasio likuiditas, pangsa pasar, reputasi/integritas, tingkat ketergantungan pada supplier, adanya resiko mata uang, prospek bisnis, faktor sosial dan politik, jangkauan marketing dan periode kredit. Kata Kunci : Usaha Kecil dan Menengah, Rating Kredit, Plafon Kredit, Kolektabilitas, Variabel Tetap, Variabel Khusus. viii
FOREWORD
Assalamualaikum Wr. Wb.
Alhamdulillahirobbil alamin. Firstly, I am so thankful to Allah SWT for all gifts and guidance, for being the one who is always with me in every situation that I face. Only because of him, I have completed this final project entitled “Collectability Analysis for Different Loan Plafond in Small and Medium Enterprise – Bank Bukopin Case” as partial fulfillment of the requirement for the degree of bachelor of management. In this opportunity, I’d like to extend my thanks to my beloved parents for the support, pray, and attention they have given to me. I am sure that I won’t be able to be like what I am now and finish this report as required. They are my biggest motivation to make a great accomplishment and achievement in everything I do. To all great people in my home ; my brother and sister (Adnan and Winda), my grandma, and Ms. Rita, your support and care are very precious and really give a big empowerment for me. I feel so blessed for having all of you to cheer my day. I would also like to thank several people around me for their support and encouragement that helps me in finishing this report :
1. Mr. Deddy P. Koesrindartoto Ph.D as my final project supervisor, who always give me support, guidance, and motivation related to both final project completion and future career. 2. Mr. Hendra Gunawan, Mr. Fauzon, Mr. Firman, and Ms. Lina from Bank Bukopin Bandung who are very helpful in helping me completing all required data for this project and guiding me a lot during my internship period. 3. Ahmad Reizky Azhar, Ratna Mutiarani, and Kartika Wiriadipura who are always patient in supporting me during the last several year in many things : academic matters, social life, and career. 4. Crescendo company
member (Firra, Arimbi, Ihsan, Ari Patera, Arresty,
Redo, Denna, Icang, Andika, Gracia, Astrid, Evita, Rinindi, Dhea, Kibar, Kinanti, Fiannita, Rizani, Nila, Deru, Sigap, Gede, Iki, etc) ix
5. All of my SBM 2010 friends (Alma E, Putu Agni, Raisa, Hazraty, Kisthia, Hasya, Mevira, Okke, Nabilla, Mila, Esa, Ikrom, Tiara, Bhre, and others ) 6. My Unilever friend, UFLP batch 2010 (Valentine, Pauline, Christina, Amanda, Ajeng, Andrie, Sarah, Vanessa, Engel, Stefanus, Leidya, Prima, Dion and Ignatius) who keep motivating me to finish my final project and graduate soon, and who will become my future career partner and motivator for several years ahead. 7. My other special friends who can’t be mentioned name by name.
Bandung, July 23rd 2010 Mega Pratiwi
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TABLE OF CONTENT
VALIDATION PAGE ........................................................................................................iii ABSTRACT (English Version) ..........................................................................................v ABSTRACT (Indonesia Version) ......................................................................................vii FOREWORD ......................................................................................................................ix TABLE OF CONTENT ......................................................................................................xi LIST OF FIGURES ............................................................................................................xiii LIST OF TABLE ................................................................................................................xv LIST OF APPENDIX .........................................................................................................xvii
CHAPTER I. INTRODUCTION 1.1
Problem Background .................................................................................................1
1.2.
Problem Identification ................................................................................................3
1.3.
Objective ....................................................................................................................3
1.4.
Scope and Limitation ..................................................................................................4
CHAPTER II. THEORETICAL FOUNDATION 2.1.
Definition, Function, and Type of Credit ................................................................5
2.2.
Credit Management...................................................................................................6
2.3.
Definition of Credit risk ...........................................................................................6
2.4.
Credit Scoring ..........................................................................................................7
2.5.
Credit Scoring Model Framework ............................................................................7
2.6.
Credit scoring of Bank Bukopin ..............................................................................9
2.7.
Collectability ............................................................................................................12
CHAPTER III. METHODOLOGY ...................................................................................13
CHAPTER IV. DATA ANALYSIS 4.1.
Data Variables.............................................................................................................17
4.2.
Data Collection ...........................................................................................................24
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4.3.
Data Analysis 4.3.1. General loan collectability model (generic variables only) ............................ 29 4.3.1.1. General model for < Rp 500 million loan plafond .......................... 33 4.3.1.2. General model for < Rp 500 million loan plafond .......................... 36 4.3.2. Collectability model for low loan plafond, less than Rp 500 million .......... 39 4.3.3. Collectability model for high loan plafond, greater than Rp 500 million .... 43
4.4.
Model Summary ........................................................................................................ 51
CHAPTER VI. CONCLUSION AND RECOMMENDATION 5.1.
Conclusion .................................................................................................................. 55
5.2.
Recommendation ....................................................................................................... 57
REFERENCES ................................................................................................................... 59
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LIST OF FIGURES Figure 2.1. Collectability Category........................................................................................12 Figure 3.1. Research Methodology .......................................................................................13 Figure 3.2. Data Analysis Process ........................................................................................16 Figure 5.1. Real Collectability vs Predicted Collectability ..................................................55
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LIST OF TABLES Table 2.1. Borrower Grade Output Sample ....................................................................... 9 Table 2.2. Debtor Business Category ................................................................................ 11 Table 2.3. Loan Collectability Level ................................................................................. 12 Table 4.1. Variables Occupied in The Research ............................................................... 1 7 Table 4.2. Business-Specific Variables for < Rp 500 Million Plafond ............................. 18 Table 4.3. Plafond-Specific Variables for < Rp 500 Million Plafond ............................... 18 Table 4.4. Plafond-Specific Variables for > Rp 500 Million Plafond ............................... 22 Table 4.5. Debtors’ Composition: Usage Type ................................................................. 24 Table 4.6. Debtors’ Composition: Collateral Type ........................................................... 25 Table 4.7. Debtors’ Composition: Strength of Collateral Claim ....................................... 25 Table 4.8. Debtors' Composition: Guarantor Type ........................................................... 25 Table 4.9. Debtors' Composition : Businesss Legality ..................................................... 26 Table 4.10. Debtors' Composition : Debtors Legality ......................................................... 26 Table 4.11. Debtors' Composition : Collateral Legality ..................................................... 27 Table 4.12. Debtors' Composition: IndustryType ............................................................... 27 Table 4.13. Debtors' Composition: Loan Plafond Category ............................................... 27 Table 4.14. Debtors' composition: Business type ............................................................... 28 Table 4.15. Debtors' composition: Collectability Level ...................................................... 28 Table 4.16. Model Summary of General Collectability Model ........................................... 29 Table 4.17. No. of Predictors in General Collectability Model ........................................... 29 Table 4.18. ANOVA summary of General Collectability Model ....................................... 30 Table 4.19. Coefficient table of General Collectability Model ........................................... 31 Table 4.20. Model Summary of General Collectability Model of Low Plafond Level ...... 33 Table 4.21. No. of Predictors in General Collectability Model of Low Plafond Level ....... 33 Table 4.22. ANOVA summary of General Collectability Model of Low Plafond Level ... 34 Table 4.23. Coefficient table of General Collectability Model of Low Plafond Level ....... 35 Table 4.24. Model Summary of General Collectability Model of High Plafond Level ...... 36 Table 4.25. No. of Predictors in General Collectability Model of High Plafond Level ...... 36 Table 4.26. ANOVA Summary of General Collectability Model of High Plafond Level .. 37 Table 4.27. Coefficient table of General Collectability Model of High Plafond Level ...... 38 Table 4.28. Model Summary of Low Loan Plafond Collectability Model ......................... 39 xiv
Table 4.29. No. of Predictors in Collectability Model of Low Loan Plafond ......................39 Table 4.30. ANOVA Summary of Low Plafond Level Collectability Model ....................40 Table 4.31. Coefficient Table of Low Loan Plafond Level Collectability Model ..............41 Table 4.32. Model Summary of High Loan Plafond Collectability Model .........................43 Table 4.33. No. of Predictors in Collectability Model of High Loan Plafond......................44 Table 4.34. ANOVA Summary of High Loan Plafond Level Collectability Model ..........45 Table 4.35. Coefficient Table of High Loan Plafond Level Collectability Model ............47
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LIST OF APPENDICES
APPENDIX A : Samples of General Model ....................................................................... 63 APPENDIX B : Samples for low loan plafond (less than Rp 500 million) ......................... 67 APPENDIX C : Samples for high loan plafond (greater than Rp 500 million) ................... 73 APPENDIX D : SPSS OUTPUT FOR GENERAL MODEL ............................................... 77 APPENDIX E : SPSS OUTPUT FOR GENERAL MODEL - LOW PLAFOND ............... 79 APPENDIX F : SPSS OUTPUT FOR GENERAL MODEL - HIGH PLAFOND ............... 81 APPENDIX G : SPSS OUTPUT FOR LOW LOAN PLAFOND MODEL ......................... 83 APPENDIX H : SPSS OUTPUT FOR HIGH LOAN PLAFOND MODEL ........................ 85
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