1 Loan-To-Value (LTV) Policy and Its Impact to Residential Property Prices: Case of Indonesia Imam Wahyudi Indrawan International Islamic University Malaysia Indrawan.imam@live.iium.edu.my Maya Puspa Rahman International Islamic University Malaysia mayapuspa@iium.edu.my Nurfatihah Ahmad Senusi International Islamic University Malaysia nurfatihahsenusi@gmail.com Abstract Introduction of Loan-To-Value (LTV) ratio in 2012 by Bank Indonesia as part of macroprudential policy is expected to be an effective tool to prevent mortgage bubble that become primary cause of Global Financial Crisis (GFC) 2008 in United States. Since then, some changes have been made by Bank Indonesia in its LTV policy ratios to adjust with real estate market and economic condition. This paper is aimed to analyze the impact of LTV policy to Residential Property Price Index (RPPI) in Indonesia by using panel data analysis method. There are three important findings that can be obtained from this paper. First, LTV policy ratios are significantly affect the RPPI in general although each ratio shows different direction of impact. Secondly, given equal increase in all LTV policy ratios to loose LTV policy, this will lead to higher RPPI which indicate higher residential property demand, and vice versa. This is indication of LTV policy ability to direct real estate market towards Bank Indonesian objective. Third, the success of LTV policy as part of macroprudential policy is subject to the condition of other policy, particularly monetary policy in which opposite direction these two policies may offset each other. This paper is expected to be good evaluation for LTV policy effectiveness, particularly on its effect to direct the real estate market as well as to guide policy maker, particularly Bank Indonesia in policy mix process. Keywords: Loan-To-Value (LTV) Policy, Indonesia, Macroprudential Policy, Residential Property Price Index. UNPUBLISHED