Factors Affecting the Performance Risk of Banks Listed on the Indonesia Stock Exchange
##plugins.themes.bootstrap3.article.main##
Abstract
This study aims to identify variables that affect the performance of banks listed on the Indonesia Stock Exchange. The addition of cost efficiency variables as independent variables is a novelty of this study. This research method involves collecting data from 17 banking companies over a six-year period (2017–2022), and applying data processing analysis using panel data regression analysis techniques. The results of the study found that Capital has a positive impact on Liquidity (LIQ) and Cost Efficiency has a positive impact on Return on Assets (ROA). The implication for financial managers is to choose the best way to utilize assets to achieve business goals, especially to improve shareholder welfare. This study emphasizes the importance of capital and cost efficiency for investors when choosing investment opportunities in banking companies in Indonesia.
##plugins.themes.bootstrap3.article.details##
How to Cite
Radhiyya, K., Sopandi, D. A. R., & Leon, F. M. (2024). Factors Affecting the Performance Risk of Banks Listed on the Indonesia Stock Exchange. ProBisnis : Jurnal Manajemen, 15(5), 739–745. Retrieved from https://ejournal.joninstitute.org/index.php/ProBisnis/article/view/692
References
Adem, M. (2023). The impact of macroprudential policy and political institutions on bank credit risk in Ethiopia: A dynamic ordinary least squares analysis. Cogent Business and Management, 10(3).https://doi.org/10.1080/23311975.2023.2257829.
Agustina, CM, Manurung, AH, & Manurung, A. (2023). Factors that Affect Bank Risk in Commercial Banks that Are Publicly Listed. Journal of Applied Finance & Banking, 19–40.https://doi.org/10.47260/jafb/1332.
Alnafisah, H., & Alwohaibi, L. (2024). The Cost Efficiency and Competition Relationship: Evidence from Saudi Arabian Banks and Non-Structural Approaches to Analysis. Economies, 12(1).https://doi.org/10.3390/economies12010015.
Arifah, S., Rahmawati, Probohudono, AN, Honggowati, S., & Kiswanto. (2023a). Performance of Indonesian State Owned Enterprises, Managerial Performance vs. Financial Performance. Global Business and Finance Review, 28(4), 132–152.https://doi.org/10.17549/gbfr.2023.28.4.132.
Arifah, S., Rahmawati, Probohudono, AN, Honggowati, S., & Kiswanto. (2023b). Performance of Indonesian State Owned Enterprises, Managerial Performance vs. Financial Performance. Global Business and Finance Review, 28(4), 132–152.https://doi.org/10.17549/gbfr.2023.28.4.132.
Chiaramonte, L., & Casu, B. (2017). Capital and liquidity ratios and financial distress. Evidence from the European banking industry. British Accounting Review, 49(2), 138–161.https://doi.org/10.1016/j.bar.2016.04.001.
Crecentia, V., & Ardiansyah, Q. &. (2020). THE EFFECT OF FINANCIAL LEVERAGE, FIRM SIZE AND FREE CASH FLOW ON FINANCIAL PERFORMANCE. In Jurnal Multiparadigma Akuntansi Tarumanagara (Vol. 2).
Duho, KCT, & Onumah, J.M. (2019a). Bank diversification strategy and intellectual capital in Ghana: an empirical analysis. Asian Journal of Accounting Research, 4(2), 246–259.https://doi.org/10.1108/AJAR-04-2019-0026.
Duho, KCT, & Onumah, J.M. (2019b). Bank diversification strategy and intellectual capital in Ghana: an empirical analysis. Asian Journal of Accounting Research, 4(2), 246–259.https://doi.org/10.1108/AJAR-04-2019-0026
THE INFLUENCEOF CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE FINANCIAL SOUNDNESS MODERATED BY FINANCIAL STABILITY ON INDONESIAN BANKINGFINANCIAL PERFORMANCE.https://doi.org/10.56805/grrbe.
Ghenimi, A., Chaibi, H., & Omri, M. A. (2024). Risk and performance of Islamic and conventional banks under COVID-19 pandemic: Evidence from MENA region. Arabian Gulf Journal of Scientific Research.https://doi.org/10.1108/AGJSR-03-2023-0098.
Hamdy, A., Mohamed, A., & Mahdy, E. (nd). Liquidity Risk and Bank Financial Performance.
Hordofa, D.F. (2023). Revisiting the relationship between board structure and bank performance in Ethiopian commercial banks. Cogent Business and Management, 10(2).https://doi.org/10.1080/23311975.2023.2240554.
Huu Vu, T., & Thanh Ngo, T. (2023). Bank capital and bank stability: The mediating role of liquidity creation and moderating role of asset diversification. Cogent Business and Management, 10(2).https://doi.org/10.1080/23311975.2023.2208425.
Imani, A., & Pracoyo, A. (2018). Analysis of the Effect of Capital, Credit Risk, and Liquidity Risk on Profitability in Banks. Journal of Management Science & Economics, 10(June), 44– 50.
Khalifaturofi'ah, SO (2023). Cost efficiency, innovation and financial performance of banks in Indonesia. Journal of Economic and Administrative Sciences, 39(1), 100–116.https://doi.org/10.1108/jeas-07-2020-0124.
Khemiri, M.A. (2023). Searching for a Threshold effect in the Diversification-profitability Relationship. Evidence from the MENA Banks. International Journal of Economics and Financial Issues, 13(6), 85–90.https://doi.org/10.32479/ijefi.15004.
Natufe, OK, & 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, HPT, Tran, N.M., & Pham, V.M. (2023). The impact of size on income diversification: an empirical study on commercial banks in Vietnam. Future Business Journal, 9(1).https://doi.org/10.1186/s43093-023-00273-6.
Nguyen, P.H., & Pham, D.T.B. (2020). The cost efficiency of Vietnamese banks – the difference between DEA and SFA. Journal of Economics and Development, 22(2), 209–227.https://doi.org/10.1108/jed-12-2019-0075.
Nguyen, Y., & Nguyen, L. (2022). Funding liquidity, bank capital, and lending growth in a developing country. Cogent Economics and Finance, 10(1).https://doi.org/10.1080/23322039.2022.2122958.
Oanh, T.T.K., Van Nguyen, D., Le, H.V., & Duong, K.D. (2023). How capital structure and bank liquidity affect bank performance: Evidence from the Bayesian approach. CogentmEconomics andFinance, 11(2).https://doi.org/10.1080/23322039.2023.2260243.
Oino, I. (2021). Bank solvency: The role of credit and liquidity risks, regulatory capital and economic stability. Banks and Bank Systems, 16(4), 84–100.https://doi.org/10.21511/bbs.16(4).2021.08
Phan, T., Daly, K., & Doan, A. T. (2018). The effects of risks and environmental factors on bank cost efficiency: A study in East Asia and Pacific region. Cogent Economics and Finance, 6(1), 1–25.https://doi.org/10.1080/23322039.2018.1510719.
Sangeeta D Misra. (2019). Bank Capital, Bank Liquidity and Credit Growth: Evidence from India Sangeeta D Misra*.
Soriano, L., & Fong, C. (2023). TOWARD THE END OF THE CORPORATE SOCIAL PERFORMANCE - CORPORATE FINANCIAL PERFORMANCE DEBATE. Business: Theory and Practice, 24(2), 416–424.https://doi.org/10.3846/btp.2023.16688.
Sultana, I., & Rahman, MM (2020). DETERMINANTS OF BANK COST EFFICIENCY: EMPIRICAL EVIDENCE FROM BANGLADESH. International Journal of Banking and Finance, 15.https://doi.org/10.32890/ijbf2020.15.1.9931.
Ullah, S., Nobanee, H., & Kemal, M.A. (2023). Corporate governance and default probability: The moderating role of bank's efficiency. Cogent Economics and Finance, 11(2).https://doi.org/10.1080/23322039.2023.2266318.
Wang, C., & Zhuang, L. (2022). Bank liquidity and the risk-taking channel of monetary policy: An empirical study of the banking system in China. PLOS ONE, 17(12 December).https://doi.org/10.1371/journal.pone.0279506.
Wijaya, RT (2023). ANALYSIS OF FINANCIAL REPORTS TO ASSESS COMPANY PERFORMANCE.
Xie, X., Zhang, F., Liu, L., Yang, Y., & Hu, X. (2023). Assessment of associated credit risk in the supply chain based on trade credit risk contamination. PLOS ONE, 18(2 February).https://doi.org/10.1371/journal.pone.0281616.
Yanenkova, I., Nehoda, Y., Drobyazko, S., Zavhorodnii, A., & Berezovska, L. (2021). Modeling of Bank Credit Risk Management Using the Cost Risk Model. Journal of Risk and Financial Management, 14(5).https://doi.org/10.3390/jrfm14050211.
Zelalem, B. A., & Abebe, A. A. (2022). Do intangible assets affect the financial performance and policy of commercial banks' in the emerging market? PLOS ONE, 17(8 August).https://doi.org/10.1371/journal.pone.0272018
.
Agustina, CM, Manurung, AH, & Manurung, A. (2023). Factors that Affect Bank Risk in Commercial Banks that Are Publicly Listed. Journal of Applied Finance & Banking, 19–40.https://doi.org/10.47260/jafb/1332.
Alnafisah, H., & Alwohaibi, L. (2024). The Cost Efficiency and Competition Relationship: Evidence from Saudi Arabian Banks and Non-Structural Approaches to Analysis. Economies, 12(1).https://doi.org/10.3390/economies12010015.
Arifah, S., Rahmawati, Probohudono, AN, Honggowati, S., & Kiswanto. (2023a). Performance of Indonesian State Owned Enterprises, Managerial Performance vs. Financial Performance. Global Business and Finance Review, 28(4), 132–152.https://doi.org/10.17549/gbfr.2023.28.4.132.
Arifah, S., Rahmawati, Probohudono, AN, Honggowati, S., & Kiswanto. (2023b). Performance of Indonesian State Owned Enterprises, Managerial Performance vs. Financial Performance. Global Business and Finance Review, 28(4), 132–152.https://doi.org/10.17549/gbfr.2023.28.4.132.
Chiaramonte, L., & Casu, B. (2017). Capital and liquidity ratios and financial distress. Evidence from the European banking industry. British Accounting Review, 49(2), 138–161.https://doi.org/10.1016/j.bar.2016.04.001.
Crecentia, V., & Ardiansyah, Q. &. (2020). THE EFFECT OF FINANCIAL LEVERAGE, FIRM SIZE AND FREE CASH FLOW ON FINANCIAL PERFORMANCE. In Jurnal Multiparadigma Akuntansi Tarumanagara (Vol. 2).
Duho, KCT, & Onumah, J.M. (2019a). Bank diversification strategy and intellectual capital in Ghana: an empirical analysis. Asian Journal of Accounting Research, 4(2), 246–259.https://doi.org/10.1108/AJAR-04-2019-0026.
Duho, KCT, & Onumah, J.M. (2019b). Bank diversification strategy and intellectual capital in Ghana: an empirical analysis. Asian Journal of Accounting Research, 4(2), 246–259.https://doi.org/10.1108/AJAR-04-2019-0026
THE INFLUENCEOF CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE FINANCIAL SOUNDNESS MODERATED BY FINANCIAL STABILITY ON INDONESIAN BANKINGFINANCIAL PERFORMANCE.https://doi.org/10.56805/grrbe.
Ghenimi, A., Chaibi, H., & Omri, M. A. (2024). Risk and performance of Islamic and conventional banks under COVID-19 pandemic: Evidence from MENA region. Arabian Gulf Journal of Scientific Research.https://doi.org/10.1108/AGJSR-03-2023-0098.
Hamdy, A., Mohamed, A., & Mahdy, E. (nd). Liquidity Risk and Bank Financial Performance.
Hordofa, D.F. (2023). Revisiting the relationship between board structure and bank performance in Ethiopian commercial banks. Cogent Business and Management, 10(2).https://doi.org/10.1080/23311975.2023.2240554.
Huu Vu, T., & Thanh Ngo, T. (2023). Bank capital and bank stability: The mediating role of liquidity creation and moderating role of asset diversification. Cogent Business and Management, 10(2).https://doi.org/10.1080/23311975.2023.2208425.
Imani, A., & Pracoyo, A. (2018). Analysis of the Effect of Capital, Credit Risk, and Liquidity Risk on Profitability in Banks. Journal of Management Science & Economics, 10(June), 44– 50.
Khalifaturofi'ah, SO (2023). Cost efficiency, innovation and financial performance of banks in Indonesia. Journal of Economic and Administrative Sciences, 39(1), 100–116.https://doi.org/10.1108/jeas-07-2020-0124.
Khemiri, M.A. (2023). Searching for a Threshold effect in the Diversification-profitability Relationship. Evidence from the MENA Banks. International Journal of Economics and Financial Issues, 13(6), 85–90.https://doi.org/10.32479/ijefi.15004.
Natufe, OK, & 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, HPT, Tran, N.M., & Pham, V.M. (2023). The impact of size on income diversification: an empirical study on commercial banks in Vietnam. Future Business Journal, 9(1).https://doi.org/10.1186/s43093-023-00273-6.
Nguyen, P.H., & Pham, D.T.B. (2020). The cost efficiency of Vietnamese banks – the difference between DEA and SFA. Journal of Economics and Development, 22(2), 209–227.https://doi.org/10.1108/jed-12-2019-0075.
Nguyen, Y., & Nguyen, L. (2022). Funding liquidity, bank capital, and lending growth in a developing country. Cogent Economics and Finance, 10(1).https://doi.org/10.1080/23322039.2022.2122958.
Oanh, T.T.K., Van Nguyen, D., Le, H.V., & Duong, K.D. (2023). How capital structure and bank liquidity affect bank performance: Evidence from the Bayesian approach. CogentmEconomics andFinance, 11(2).https://doi.org/10.1080/23322039.2023.2260243.
Oino, I. (2021). Bank solvency: The role of credit and liquidity risks, regulatory capital and economic stability. Banks and Bank Systems, 16(4), 84–100.https://doi.org/10.21511/bbs.16(4).2021.08
Phan, T., Daly, K., & Doan, A. T. (2018). The effects of risks and environmental factors on bank cost efficiency: A study in East Asia and Pacific region. Cogent Economics and Finance, 6(1), 1–25.https://doi.org/10.1080/23322039.2018.1510719.
Sangeeta D Misra. (2019). Bank Capital, Bank Liquidity and Credit Growth: Evidence from India Sangeeta D Misra*.
Soriano, L., & Fong, C. (2023). TOWARD THE END OF THE CORPORATE SOCIAL PERFORMANCE - CORPORATE FINANCIAL PERFORMANCE DEBATE. Business: Theory and Practice, 24(2), 416–424.https://doi.org/10.3846/btp.2023.16688.
Sultana, I., & Rahman, MM (2020). DETERMINANTS OF BANK COST EFFICIENCY: EMPIRICAL EVIDENCE FROM BANGLADESH. International Journal of Banking and Finance, 15.https://doi.org/10.32890/ijbf2020.15.1.9931.
Ullah, S., Nobanee, H., & Kemal, M.A. (2023). Corporate governance and default probability: The moderating role of bank's efficiency. Cogent Economics and Finance, 11(2).https://doi.org/10.1080/23322039.2023.2266318.
Wang, C., & Zhuang, L. (2022). Bank liquidity and the risk-taking channel of monetary policy: An empirical study of the banking system in China. PLOS ONE, 17(12 December).https://doi.org/10.1371/journal.pone.0279506.
Wijaya, RT (2023). ANALYSIS OF FINANCIAL REPORTS TO ASSESS COMPANY PERFORMANCE.
Xie, X., Zhang, F., Liu, L., Yang, Y., & Hu, X. (2023). Assessment of associated credit risk in the supply chain based on trade credit risk contamination. PLOS ONE, 18(2 February).https://doi.org/10.1371/journal.pone.0281616.
Yanenkova, I., Nehoda, Y., Drobyazko, S., Zavhorodnii, A., & Berezovska, L. (2021). Modeling of Bank Credit Risk Management Using the Cost Risk Model. Journal of Risk and Financial Management, 14(5).https://doi.org/10.3390/jrfm14050211.
Zelalem, B. A., & Abebe, A. A. (2022). Do intangible assets affect the financial performance and policy of commercial banks' in the emerging market? PLOS ONE, 17(8 August).https://doi.org/10.1371/journal.pone.0272018
.