The Utilization of Banks as Distribution Channels

The purpose of this study was to determine the reasons why asset management companies in Indonesia utilize banks as their major distribution channels for mutual funds. The study examined seven functions of a distribution channel: the gathering of information, contacting, promotion, matching, negotiation, physical distribution, and risk-taking. Managers from the top twelve asset management companies in Indonesia were surveyed using a questionnaire that consisted of close-ended Likert questions (quantitative) as well as open-ended questions for elaboration (qualitative). The study found that all seven functions examined had positive correlations, with the function of physical distribution being the strongest (Rs=0.844) and the function of matching being the least strong as per correlation (Rs=0.670). Descriptive statistical analysis was then applied to derive a ranking of importance among all of the seven functions.