This study analyzes the effect of bank fundamentals on deposits in Indonesian commercial banks. We use data of 98 Indonesian commercial banks lasted from 2013 to 2018. The fundamental condition is measured using profitability, capital adequacy, efficiency, and bank size. Our empirical results show that bank fundamental condition has a significant impact on the bank deposits both in the supply and demand function. Specifically, profitability and capital adequacy have a negative effect while efficiency and bank size show a positive effect. The findings remains consistent across three different regression techniques: the random effect, three-stage least squares, and generalized method of moments.

Keywords: bank fundamental conditions, deposits, demand function, supply function