Salim, Kevin and Setyawan, Ignatius Roni Determining Factors of Banking Performance in Indonesia. Determining Factors of Banking Performance in Indonesia.
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Abstract
Motivated by the large number of banking studies in
Indonesia that have not included NOP (Net Open Position) in
profitability modeling, our research aims to realize this. As for
the reason for the importance of the Net Open Position (NOP)
variable, it is almost certain that all banks will use foreign
currency items in their asset and liability management activities.
All commercial banks in the BUKU level 1, 2, 3 and 4 will
definitely be involved in demand deposits as a consequence of
continuing financial market activities to safeguard the economic
activities of a country.
By referring to previous research models from Al-Omar, et.al.
(2008), Albulescu (2015), Muhmad & Hashim (2015), Menicucci
& Paolucci (2016) and Saputri & Oetomo (2016) then identified
four determinants of bank profitability variables, namely CAR,
NPL, NOP and LDR. These four variables will then be defined
conceptually and formulas referring to banking theory applicable
in Indonesia, namely CAMEL (Capital, Management, Asset,
Earning and Liquidity). Each variable will function as a bank
specific factor that will determine the profitability of the bank
both grossly as measured by ROA and net measured by ROE.
Results of the test with panel data regression show that the
NOP variable is always a determining factor in the ROA and the
ROE models. This also provides evidence that NOP is indeed very
important in determining ROA and ROE for bankers. With the
proven NOP as the main determinant, the argument is supported
that commercial banks must pay attention to the foreign
exchange items in their asset and liability management. In
addition to NOP, NPL is also important for determining ROA
and ROE of banks.
| Item Type: | Article |
|---|---|
| Subjects: | Peer Review |
| Divisions: | Fakultas Ekonomi > Manajemen |
| Depositing User: | Puskom untar untar |
| Date Deposited: | 10 Nov 2020 10:07 |
| Last Modified: | 10 Nov 2020 10:08 |
| URI: | https://repotest.untar.ac.id/id/eprint/13218 |
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