Factors Affecting the Risk and Financial Performance of Banks in Indonesia
Article Sidebar
Published
Dec 28, 2024
Main Article Content
Abstract
This study aims to determine the effect of systematic risk (Beta) and COVID-19 as independent variables, then non-performing loans (NPL), liquidity risk (LR), solvency risk (SR), bank risk (Z-score), and ownership type (OT) as control variables on the dependent variables financial performance proxied using ROA and ROE. The research method is quantitative covering data from 17 banks listed in Indonesia over a six-year period (2017-2022) and using panel data regression analysis technique processing. The addition of new independent variables in this study is operational risk which has a positive and significant effect on ROA and ROE. In addition, liquidity risk and solvency risk also have a positive and significant effect on ROA and ROE, while ownership type variables have negative and significant effect on ROA and ROE. Understanding the impact of these factors will help companies make the right decisions to reduce risk and optimize their financial performance in Indonesia. The implication for financial managers is to maximize the long-term debt and leverage of the company which aims to support the company’s operational activities. This research also provides important information for investor in making investment by assessing companies that have good financial performance.
Article Details
Section
Articles
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
References
Aboagye-Otchere, F., & Boateng, P. Y. (2023). Financing decision, ownership type and financial performance of listed non-financial companies in Ghana. Cogent Business and Management, 10(1). https://doi.org/10.1080/23311975.2023.2170070
Adrian, T., & Brunnermeier, M. K. (2016). CoVaR. American Economic Review, 106(7), 1705–1741. https://doi.org/10.1257/aer.20120555
Ahmad Wani, A., & Ahmad Dar, S. (2015). Relationship between Financial Risk and Financial Performance: An Insight of Indian Insurance Industry. In International Journal of Science and Research (IJSR) ISSN (Vol. 4). www.ijsr.net
Ahmed, H. M., El-Halaby, S. I., & Soliman, H. A. (2022). The consequence of the credit risk on the financial performance in light of COVID-19: Evidence from Islamic versus conventional banks across MEA region. Future Business Journal, 8(1). https://doi.org/10.1186/s43093-022-00122-y
Astuti, E. P., & Husna, F. M. (2018). The Effect of Net Interest Margin (NIM) and Operational Costs Operating Income (BOPO) on Return on Assets (RoA) at PT. Bank Rakyat Indonesia, Tbk. In Pinisi Discretion Review (Vol. 2, Issue 1). www.ir-bri.com
Aryaningsih L, Novitasari N, & Widhiastuti N. (2022) Pengaruh Ukuran Perusahaan, Corporate Social Responsibility, Solvabilitas, Dan Likuiditas Terhadap Kinerja Keuangan
Baumöhl, E., Bouri, E., Hoang, T. H. Van, Hussain Shahzad, S. J., & Výrost, T. (2022). Measuring systemic risk in the global banking sector: A cross-quantilogram network approach. Economic Modelling, 109. https://doi.org/10.1016/j.econmod.2022.105775
Beck, T., & Keil, J. (2022). Have Banks Caught Corona? Effects of COVID on Lending in the U.S.
Ben Zeineb, G., & Mensi, S. (2018). Corporate governance, risk and efficiency: evidence from GCC Islamic banks. Managerial Finance, 44(5), 551–569. https://doi.org/10.1108/MF-05-2017-0186
Dayal, Y. (2021). REPORT ON TREND AND PROGRESS OF BANKING IN INDIA 2020- 21 RESERVE BANK OF INDIA. Reserve Bank of India.
Din, S. U., Arshad Khan, M., Khan, M. J., & Khan, M. Y. (2022). Ownership structure and corporate financial performance in an emerging market: a dynamic panel data analysis. International Journal of Emerging Markets, 17(8), 1973–1997. https://doi.org/10.1108/IJOEM-03-2019-0220
Dura, J., Akuntansi, P., Ekonomi, F., Bisnis, D., Teknologi, I., Malang, A., & Kunci, K. (2022). MDP STUDENT CONFERENCE (MSC) 2022 Pengungkapan Sustainability Kinerja Ekonomi Terhadap Nilai Perusahaan Melalui Kinerja Keuangan Perusahaan Manufaktur.
Fahdiansyah, R., Qudsi, J., Bachtiar, A., & Bumigora Mataram, S. (2018). STRUKTUR KEPEMILIKAN DAN NILAI PERUSAHAAN: (STUDI PADA PERUSAHAAN MANUFAKTUR YANG LISTING DI BURSA EFEK INDONESIA) (Vol. 1, Issue 2).
Goswami, A. (2022a). Does credit risk persist in the Indian banking industry? Recent evidence. Asian Journal of Economics and Banking, 6(2), 178–197. https://doi.org/10.1108/ajeb-01-2021-0006
Goswami, A. (2022b). Does credit risk persist in the Indian banking industry? Recent evidence. Asian Journal of Economics and Banking, 6(2), 178–197. https://doi.org/10.1108/ajeb-01-2021-0006
Goswami, A., & Malik, P. (2024). Risks and financial performance of Indian banks: a cursory look at the COVID-19 period. Benchmarking: An International Journal. https://doi.org/10.1108/BIJ-02-2023-0109
Grace Kemunto, O., Gideon, Dr. M., & Robert Kisavi, Dr. M. (2020). Operational Risk Management and Financial Performance; Evidence from Deposit Taking Savings and Credit Cooperative Societies in Western Kenya. Scholars Journal of Economics, Business and Management, 7(9), 299–303. https://doi.org/10.36347/sjebm.2020.v07i09.003
Inri Gloria Tampi 2022. ().
Ivan, M. (2020). PENGARUH MEKANISME CORPORATE GOVERNANCE DAN STRUKTUR KEPEMILIKAN TERHADAP KINERJA KEUANGAN PERUSAHAAN Nur Handayani Sekolah Tinggi Ilmu Ekonomi Indonesia (STIESIA) Surabaya.
Kandie, S. K., Bitange, J., & Phd, B. (2023). Risk Management and Financial Performance of Commercial Banks Listed at the Nairobi Securities Exchange. International Journal of Finance, 8(2), 40–64. www.carijournals.orgwww.carijournals.org
Kohar Mudzakar, M., & Wardanny, I. P. (2021). The Effect Of Return On Asset, Return On Equity, Earning Per Share, And Price Earning Ratio Toward Stock Return (Empirical Study Of Transportation). In Turkish Journal of Computer and Mathematics Education (Vol. 12, Issue 8). www.idx.co.id
Kwashie, A. A., Baidoo, S. T., & Ayesu, E. K. (2022a). Investigating the impact of credit risk on financial performance of commercial banks in Ghana. Cogent Economics and Finance, 10(1). https://doi.org/10.1080/23322039.2022.2109281
Kwashie, A. A., Baidoo, S. T., & Ayesu, E. K. (2022b). Investigating the impact of credit risk on financial performance of commercial banks in Ghana. Cogent Economics and Finance, 10(1). https://doi.org/10.1080/23322039.2022.2109281
Mardianto & Khellystina, (2021). Analisis Pengaruh Komposisi Kepemilikan Terhadap Manajemen Laba Pada Perusahaan Yang Terdaftar Di Bursa Efek Indonesia. Journal of Applied Accounting and Taxation. Vol. 6, No 2.
Melisa Safitri, T., Indriyani, H., Bina Darma, U., & Jendral Ahmad Yani No, J. (2017). Seminar Hasil Penelitian FEB PENGARUH KINERJA KEUANGAN DAN RISIKO SISTEMATIS TERHADAP RETURN SAHAM PADA PERUSAHAAN FARMASI DI BEI.
Morara, K., & Sibindi, A. B. (2021). Determinants of Financial Performance of Insurance Companies: Empirical Evidence Using Kenyan Data. Journal of Risk and Financial Management, 14(12). https://doi.org/10.3390/jrfm14120566
Natufe, O. K., & Evbayiro-Osagie, E. I. (2023). Credit Risk Management and the Financial Performance of Deposit Money Banks: Some New Evidence. Journal of Risk and Financial Management, 16(7). https://doi.org/10.3390/jrfm16070302
Nguyen, K. Q. T., Nga Phan, T. H., & Hang, N. M. (2024). The effect of liquidity on firm’s performance: Case of Vietnam. Journal of Eastern European and Central Asian Research (JEECAR), 11(1), 176–187. https://doi.org/10.15549/jeecar.v11i1.1344
Nurul, R., Amijaya, F., & Alaika, R. (2023). DOES FINANCIAL RISK MATTER FOR FINANCIAL PERFORMANCE IN SHARIA BANKS? Jurnal Ilmu Ekonomi Terapan, 8(1), 24–40. https://doi.org/10.20473/jiet.v8.i1.44675
Otchere, F. A., & Boateng, P. Y. (2023). Financing decision, ownership type and financial performance of listed non-financial companies in Ghana. Cogent Business and Management, 10(1), 1–21. https://doi.org/10.1080/23311975.2023.2170070
Park, C. Y., & Shin, K. (2021). COVID-19, nonperforming loans, and cross-border bank lending. Journal of Banking and Finance, 133. https://doi.org/10.1016/j.jbankfin.2021.106233
Phulong Mamaro, L., & Gladys Legotlo, T. (2021). The Financial Performance and Financial Leverage of Retail Listed Firms in South Africa.
Pinto, G., Rastogi, S., & Agarwal, B. (2024). Does promoters’ holding influence the liquidity risk of banks? Journal of Financial Regulation and Compliance. https://doi.org/10.1108/jfrc-09-2023-0144
Ramadhan, S., Afif, M., & Leon, F. M. (2023). Financial Performance Factors Influencing Initial Public Offering (IPO) of Companies in Indonesia. https://doi.org/10.56805/grrbe
Tampi, I. G. (2022). The Effect Of Asset Growth, Debt To Equity Ratio And Earning Per
Share On Systematic Risk And Stock Returns In Go Public Banks 2014-2018.
Tran, D. V., Hassan, M. K., Alam, A. W., & Dau, N. (2022). Banks’ financial soundness during the COVID-19 pandemic. Journal of Economics and Finance. https://doi.org/10.1007/s12197-022-09591-x
Wahyu, E., & Budianto, H. (n.d.). The Influence of Return On Equity (ROE) in Islamic Banking: Mapping Research Topics using VOSviewer Bibliometric and Library Research. https://doi.org/10.5281/zenodo.10117294
Yulianti, M., Hanly, H., Wijaya, F., & Syah Lubis, M. (2022). ANALISIS PENGARUH LDR, BOPO, NIM DAN NPL TERHADAP RETURN OF ASSET PADA PERBANKAN YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2017-2020 (Vol. 4, Issue 1).
Adrian, T., & Brunnermeier, M. K. (2016). CoVaR. American Economic Review, 106(7), 1705–1741. https://doi.org/10.1257/aer.20120555
Ahmad Wani, A., & Ahmad Dar, S. (2015). Relationship between Financial Risk and Financial Performance: An Insight of Indian Insurance Industry. In International Journal of Science and Research (IJSR) ISSN (Vol. 4). www.ijsr.net
Ahmed, H. M., El-Halaby, S. I., & Soliman, H. A. (2022). The consequence of the credit risk on the financial performance in light of COVID-19: Evidence from Islamic versus conventional banks across MEA region. Future Business Journal, 8(1). https://doi.org/10.1186/s43093-022-00122-y
Astuti, E. P., & Husna, F. M. (2018). The Effect of Net Interest Margin (NIM) and Operational Costs Operating Income (BOPO) on Return on Assets (RoA) at PT. Bank Rakyat Indonesia, Tbk. In Pinisi Discretion Review (Vol. 2, Issue 1). www.ir-bri.com
Aryaningsih L, Novitasari N, & Widhiastuti N. (2022) Pengaruh Ukuran Perusahaan, Corporate Social Responsibility, Solvabilitas, Dan Likuiditas Terhadap Kinerja Keuangan
Baumöhl, E., Bouri, E., Hoang, T. H. Van, Hussain Shahzad, S. J., & Výrost, T. (2022). Measuring systemic risk in the global banking sector: A cross-quantilogram network approach. Economic Modelling, 109. https://doi.org/10.1016/j.econmod.2022.105775
Beck, T., & Keil, J. (2022). Have Banks Caught Corona? Effects of COVID on Lending in the U.S.
Ben Zeineb, G., & Mensi, S. (2018). Corporate governance, risk and efficiency: evidence from GCC Islamic banks. Managerial Finance, 44(5), 551–569. https://doi.org/10.1108/MF-05-2017-0186
Dayal, Y. (2021). REPORT ON TREND AND PROGRESS OF BANKING IN INDIA 2020- 21 RESERVE BANK OF INDIA. Reserve Bank of India.
Din, S. U., Arshad Khan, M., Khan, M. J., & Khan, M. Y. (2022). Ownership structure and corporate financial performance in an emerging market: a dynamic panel data analysis. International Journal of Emerging Markets, 17(8), 1973–1997. https://doi.org/10.1108/IJOEM-03-2019-0220
Dura, J., Akuntansi, P., Ekonomi, F., Bisnis, D., Teknologi, I., Malang, A., & Kunci, K. (2022). MDP STUDENT CONFERENCE (MSC) 2022 Pengungkapan Sustainability Kinerja Ekonomi Terhadap Nilai Perusahaan Melalui Kinerja Keuangan Perusahaan Manufaktur.
Fahdiansyah, R., Qudsi, J., Bachtiar, A., & Bumigora Mataram, S. (2018). STRUKTUR KEPEMILIKAN DAN NILAI PERUSAHAAN: (STUDI PADA PERUSAHAAN MANUFAKTUR YANG LISTING DI BURSA EFEK INDONESIA) (Vol. 1, Issue 2).
Goswami, A. (2022a). Does credit risk persist in the Indian banking industry? Recent evidence. Asian Journal of Economics and Banking, 6(2), 178–197. https://doi.org/10.1108/ajeb-01-2021-0006
Goswami, A. (2022b). Does credit risk persist in the Indian banking industry? Recent evidence. Asian Journal of Economics and Banking, 6(2), 178–197. https://doi.org/10.1108/ajeb-01-2021-0006
Goswami, A., & Malik, P. (2024). Risks and financial performance of Indian banks: a cursory look at the COVID-19 period. Benchmarking: An International Journal. https://doi.org/10.1108/BIJ-02-2023-0109
Grace Kemunto, O., Gideon, Dr. M., & Robert Kisavi, Dr. M. (2020). Operational Risk Management and Financial Performance; Evidence from Deposit Taking Savings and Credit Cooperative Societies in Western Kenya. Scholars Journal of Economics, Business and Management, 7(9), 299–303. https://doi.org/10.36347/sjebm.2020.v07i09.003
Inri Gloria Tampi 2022. ().
Ivan, M. (2020). PENGARUH MEKANISME CORPORATE GOVERNANCE DAN STRUKTUR KEPEMILIKAN TERHADAP KINERJA KEUANGAN PERUSAHAAN Nur Handayani Sekolah Tinggi Ilmu Ekonomi Indonesia (STIESIA) Surabaya.
Kandie, S. K., Bitange, J., & Phd, B. (2023). Risk Management and Financial Performance of Commercial Banks Listed at the Nairobi Securities Exchange. International Journal of Finance, 8(2), 40–64. www.carijournals.orgwww.carijournals.org
Kohar Mudzakar, M., & Wardanny, I. P. (2021). The Effect Of Return On Asset, Return On Equity, Earning Per Share, And Price Earning Ratio Toward Stock Return (Empirical Study Of Transportation). In Turkish Journal of Computer and Mathematics Education (Vol. 12, Issue 8). www.idx.co.id
Kwashie, A. A., Baidoo, S. T., & Ayesu, E. K. (2022a). Investigating the impact of credit risk on financial performance of commercial banks in Ghana. Cogent Economics and Finance, 10(1). https://doi.org/10.1080/23322039.2022.2109281
Kwashie, A. A., Baidoo, S. T., & Ayesu, E. K. (2022b). Investigating the impact of credit risk on financial performance of commercial banks in Ghana. Cogent Economics and Finance, 10(1). https://doi.org/10.1080/23322039.2022.2109281
Mardianto & Khellystina, (2021). Analisis Pengaruh Komposisi Kepemilikan Terhadap Manajemen Laba Pada Perusahaan Yang Terdaftar Di Bursa Efek Indonesia. Journal of Applied Accounting and Taxation. Vol. 6, No 2.
Melisa Safitri, T., Indriyani, H., Bina Darma, U., & Jendral Ahmad Yani No, J. (2017). Seminar Hasil Penelitian FEB PENGARUH KINERJA KEUANGAN DAN RISIKO SISTEMATIS TERHADAP RETURN SAHAM PADA PERUSAHAAN FARMASI DI BEI.
Morara, K., & Sibindi, A. B. (2021). Determinants of Financial Performance of Insurance Companies: Empirical Evidence Using Kenyan Data. Journal of Risk and Financial Management, 14(12). https://doi.org/10.3390/jrfm14120566
Natufe, O. K., & Evbayiro-Osagie, E. I. (2023). Credit Risk Management and the Financial Performance of Deposit Money Banks: Some New Evidence. Journal of Risk and Financial Management, 16(7). https://doi.org/10.3390/jrfm16070302
Nguyen, K. Q. T., Nga Phan, T. H., & Hang, N. M. (2024). The effect of liquidity on firm’s performance: Case of Vietnam. Journal of Eastern European and Central Asian Research (JEECAR), 11(1), 176–187. https://doi.org/10.15549/jeecar.v11i1.1344
Nurul, R., Amijaya, F., & Alaika, R. (2023). DOES FINANCIAL RISK MATTER FOR FINANCIAL PERFORMANCE IN SHARIA BANKS? Jurnal Ilmu Ekonomi Terapan, 8(1), 24–40. https://doi.org/10.20473/jiet.v8.i1.44675
Otchere, F. A., & Boateng, P. Y. (2023). Financing decision, ownership type and financial performance of listed non-financial companies in Ghana. Cogent Business and Management, 10(1), 1–21. https://doi.org/10.1080/23311975.2023.2170070
Park, C. Y., & Shin, K. (2021). COVID-19, nonperforming loans, and cross-border bank lending. Journal of Banking and Finance, 133. https://doi.org/10.1016/j.jbankfin.2021.106233
Phulong Mamaro, L., & Gladys Legotlo, T. (2021). The Financial Performance and Financial Leverage of Retail Listed Firms in South Africa.
Pinto, G., Rastogi, S., & Agarwal, B. (2024). Does promoters’ holding influence the liquidity risk of banks? Journal of Financial Regulation and Compliance. https://doi.org/10.1108/jfrc-09-2023-0144
Ramadhan, S., Afif, M., & Leon, F. M. (2023). Financial Performance Factors Influencing Initial Public Offering (IPO) of Companies in Indonesia. https://doi.org/10.56805/grrbe
Tampi, I. G. (2022). The Effect Of Asset Growth, Debt To Equity Ratio And Earning Per
Share On Systematic Risk And Stock Returns In Go Public Banks 2014-2018.
Tran, D. V., Hassan, M. K., Alam, A. W., & Dau, N. (2022). Banks’ financial soundness during the COVID-19 pandemic. Journal of Economics and Finance. https://doi.org/10.1007/s12197-022-09591-x
Wahyu, E., & Budianto, H. (n.d.). The Influence of Return On Equity (ROE) in Islamic Banking: Mapping Research Topics using VOSviewer Bibliometric and Library Research. https://doi.org/10.5281/zenodo.10117294
Yulianti, M., Hanly, H., Wijaya, F., & Syah Lubis, M. (2022). ANALISIS PENGARUH LDR, BOPO, NIM DAN NPL TERHADAP RETURN OF ASSET PADA PERBANKAN YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2017-2020 (Vol. 4, Issue 1).