Financial services authority on profitability with external factors as moderating variables at regional development banks in Indonesia

Reslianty Rachim,Rahcmad Budi Suharto,Felisitas Defung,Ardi Paminto,Made Setini,Sukisno S Riadi

doi:10.5267/j.ac.2021.3.020

Abstract

Analyzing the effects of Internal Factors, Local Government Interventions, External Factors and Policies of Bank Indonesia and the Financial Services Authority on Profitability with External Factors as Moderating Variables at Regional Development Banks in Indonesia. Sample this research is a Regional Development Bank of 24 Banks with research data from 2010 to 2018. A total of 24 Regional Development Banks throughout Indonesia were sampled from 2010 to 2018, so the observation data in this study includes 216 research data and there are 80 outlier data so that the data processed in this study with 136 data processed in the study. Analysis of the data in this study used Structural Equation Modeling with Warp PLS Program and internal actors gave a significant influence on profitability, Intervenes local government gave insignificant influence on profitability, External actors gave a significant influence on profitability, policy Bank Indonesia and financial services authority gave insignificant influence on profitability, Policy Bank Indonesia and financial services authority gave a positive and insignificant influence on profitability with external factors as moderation at the Regional Development Bank in Indonesia.

Highlights

The profitability and efficiency level of management in the Regional Development Bank is still not optimal
Factors that determine the profitability of the Regional Development Bank include internal factors, local government interventions, external actors as well as Bank Indonesia policies and financial services authorities that are able to influence the profitability of the Regional Development Bank
Based on the results of the study, it can be known that if internal factors measured through the size of the company and total other revenues increase by 1% profitability measured through return on assets and return on equity at the Regional Development Bank in Indonesia will decrease by 0.217% with the influence of a significant decrease

Summary

Introduction

The profitability and efficiency level of management in the Regional Development Bank is still not optimal. Factors that determine the profitability of the Regional Development Bank include internal factors, local government interventions, external actors as well as Bank Indonesia policies and financial services authorities that are able to influence the profitability of the Regional Development Bank. Factors that affect profitability are supported by existing phenomena in the field as well as several empirical studies that state the influence of each variable on profitability. There is a positive correlation between company size and profitability. Acaravci and Calim (2013) and Kapaya and Raphael (2016) stated that the size of the company is capable of being an indication of profitability. The size of the company is not always able to indicate the profitability of a company; this is evidenced by Almazari (2014) where his research mentioned that there is no significant relationship between the size of the company and profitability

Objectives

Methods

Findings

Conclusion