The Indonesian Commercial Banks' Profitability and Credit Risk
This study examines the impact of credit risk on the profitability of commercial banks listed on the Indonesia Stock Exchange (IDX) during the period 2013-2022. Using purposive sampling, 40 banks were selected from 47 listed banks. Panel data regression analysis was employed to explore the impact o...
Saved in:
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Program Studi Keuangan dan Perbankan, Fakultas Ekonomi dan Bisnis, Universitas Komputer Indonesia
2024-12-01
|
| Series: | Jurnal Ilmu Keuangan dan Perbankan |
| Online Access: | https://ojs.unikom.ac.id/index.php/jika/article/view/14135 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1846100175684108288 |
|---|---|
| author | Ilham Setiawan Rita Zulbetti Perwito Perwito |
| author_facet | Ilham Setiawan Rita Zulbetti Perwito Perwito |
| author_sort | Ilham Setiawan |
| collection | DOAJ |
| description |
This study examines the impact of credit risk on the profitability of commercial banks listed on the Indonesia Stock Exchange (IDX) during the period 2013-2022. Using purposive sampling, 40 banks were selected from 47 listed banks. Panel data regression analysis was employed to explore the impact of credit risk, measured by Non-Performing Loans (NPL) and Loan Loss Provisions (LLP), on profitability measured by Return on Assets (ROA). The results indicate that NPL has a negative but insignificant effect on ROA, suggesting that an increase in NPL does not directly impact a decrease in ROA. Conversely, LLP has a negative and significant effect on ROA, indicating that an increase in LLP can reduce ROA as banks allocate substantial funds for loan losses, thereby affecting their profitability. Therefore, banks and regulators need to enhance credit risk management. This not only impacts banking profitability but also can maintain the overall stability of the financial system.
Keywords: Credit Risk, Non-Performing Loan, Loan Loss Provision, Return on Assets, Bank Profitability.
|
| format | Article |
| id | doaj-art-7ec96bddab81461e9d06964aa9e3b9ad |
| institution | Kabale University |
| issn | 2089-2845 2655-9234 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Program Studi Keuangan dan Perbankan, Fakultas Ekonomi dan Bisnis, Universitas Komputer Indonesia |
| record_format | Article |
| series | Jurnal Ilmu Keuangan dan Perbankan |
| spelling | doaj-art-7ec96bddab81461e9d06964aa9e3b9ad2024-12-30T14:07:23ZengProgram Studi Keuangan dan Perbankan, Fakultas Ekonomi dan Bisnis, Universitas Komputer IndonesiaJurnal Ilmu Keuangan dan Perbankan2089-28452655-92342024-12-0114110.34010/jika.v14i1.14135The Indonesian Commercial Banks' Profitability and Credit RiskIlham Setiawan0Rita Zulbetti1Perwito Perwito2Universitas Muhammadiah BandungUniversitas Muhammadiyah BandungUniversitas Muhammadiyah Bandung This study examines the impact of credit risk on the profitability of commercial banks listed on the Indonesia Stock Exchange (IDX) during the period 2013-2022. Using purposive sampling, 40 banks were selected from 47 listed banks. Panel data regression analysis was employed to explore the impact of credit risk, measured by Non-Performing Loans (NPL) and Loan Loss Provisions (LLP), on profitability measured by Return on Assets (ROA). The results indicate that NPL has a negative but insignificant effect on ROA, suggesting that an increase in NPL does not directly impact a decrease in ROA. Conversely, LLP has a negative and significant effect on ROA, indicating that an increase in LLP can reduce ROA as banks allocate substantial funds for loan losses, thereby affecting their profitability. Therefore, banks and regulators need to enhance credit risk management. This not only impacts banking profitability but also can maintain the overall stability of the financial system. Keywords: Credit Risk, Non-Performing Loan, Loan Loss Provision, Return on Assets, Bank Profitability. https://ojs.unikom.ac.id/index.php/jika/article/view/14135 |
| spellingShingle | Ilham Setiawan Rita Zulbetti Perwito Perwito The Indonesian Commercial Banks' Profitability and Credit Risk Jurnal Ilmu Keuangan dan Perbankan |
| title | The Indonesian Commercial Banks' Profitability and Credit Risk |
| title_full | The Indonesian Commercial Banks' Profitability and Credit Risk |
| title_fullStr | The Indonesian Commercial Banks' Profitability and Credit Risk |
| title_full_unstemmed | The Indonesian Commercial Banks' Profitability and Credit Risk |
| title_short | The Indonesian Commercial Banks' Profitability and Credit Risk |
| title_sort | indonesian commercial banks profitability and credit risk |
| url | https://ojs.unikom.ac.id/index.php/jika/article/view/14135 |
| work_keys_str_mv | AT ilhamsetiawan theindonesiancommercialbanksprofitabilityandcreditrisk AT ritazulbetti theindonesiancommercialbanksprofitabilityandcreditrisk AT perwitoperwito theindonesiancommercialbanksprofitabilityandcreditrisk AT ilhamsetiawan indonesiancommercialbanksprofitabilityandcreditrisk AT ritazulbetti indonesiancommercialbanksprofitabilityandcreditrisk AT perwitoperwito indonesiancommercialbanksprofitabilityandcreditrisk |