Indonesian Banking Sector Research Articles

Business Transformation in a Distinctive Institutional Setting: A Study of Regional Development Banks in Indonesia

Limited research exists on business transformation strategy within the Indonesian banking sector, particularly regarding regional development banks, which play a crucial role in regional economic advancement. This study investigates the drivers of successful business transformation in Indonesian RDBs and their impact on organizational performance, examining the moderating role of regional government intervention. Employing structural equation modeling, the study analyzed data from 255 branch managers across 27 RDBs. Results reveal that talent development, transformational leadership, and digital adoption significantly drive successful business transformation, which in turn enhances organizational performance. Contrary to expectations, regional government intervention did not demonstrate a moderating effect. This study provides valuable insights for RDB managers and policymakers, emphasizing the imporace of talent development, leadership, and digital adoption as key pillars of successful transformation and highlighting the need for a nuanced understanding of institutional influences within this sector.

Risk Management As A Determinant Of Indonesian Banking Financial Performance: A Systematic Literature Approach

This study aims to understand how risk management affects financial performance in the Indonesian banking sector. In a business environment full of uncertainty, especially in the banking sector, risk management is key to ensuring financial stability. Systematic Literature This review (SLR) analyzes the findings of articles published between 2016 and 2022, focusing on the main risks faced by banks: credit risk, market risk, liquidity risk, and operational risk. The selected articles were obtained from leading journal sources in the fields of economics and business. The literature selection process includes the stages of identification, screening, and thematic analysis to identify trends and correlations between risk management and financial performance indicators such as Return on Assets (ROA) and Return on Equity (ROE). The results of the study indicate that credit risk and operational risk have the most significant impact on financial performance, while market and liquidity risks show varying effects depending on the market situation and internal conditions of the bank. These findings underline the importance of a proactive approach to risk management, including the implementation of integrated risk mitigation policies and the use of effective internal controls. Thus, risk management not only serves as a safeguard against potential losses but also as a support for business sustainability. This study recommends further research to explore new risks such as cyber threats and regulatory changes, which are increasingly relevant in the context of the modern banking industry. These results are expected to provide insights for financial practitioners and banking leaders in improving the resilience and financial performance of their companies.

Legal Protection Against Subrogation Without an Authentic Deed as a Binding Agreement in Banking Practices in Indonesia

The practice of subrogation without an authentic deed in the Indonesian banking sector creates significant legal uncertainty. This research analyses the impact of the practice on legal protection for new creditors, particularly in the context of legal protection theory proposed by Isnaeni. This paper uses a normative research method with a literature study approach. The literature study approach is carried out by collecting and analysing secondary data relevant to the research topic. The secondary data can be in the form of primary legal materials which include: laws, regulations, and jurisprudence related to subrogation, authentic deeds, and agreements. Secondary legal materials include books, scientific journals, articles, and other scientific papers. The data collection techniques used in this research are literature searches by conducting literature searches in libraries, the internet, and other sources to obtain primary and secondary legal materials relevant to the research topic and document studies by studying and analysing primary and secondary legal materials that have been collected. The results show that the absence of a notarial deed as authentic evidence makes it difficult to prove the existence of a subrogation agreement, thus hampering the efforts of new creditors to obtain their rights. The form of internal legal protection is by collecting various evidence such as correspondence, witnesses, and transaction evidence. Meanwhile, external legal protection can also be done by filing a tort lawsuit in court. This research also recommends the need to improve regulations and increase legal awareness to overcome these problems.

Analysis of the Impact of Liquidity Policy and Economic Fluctuations on Asset and Wealth Management in the Banking Sector in Indonesia

This study analyzes the impact of liquidity policy and economic fluctuations on asset and wealth management in the Indonesian banking sector. Utilizing a quantitative approach, data were collected from 150 banking professionals through a structured questionnaire and analyzed using Structural Equation Modeling (SEM) with Partial Least Squares (PLS) version 3. The results demonstrate that economic fluctuations significantly impact both asset and wealth management, with a stronger influence on wealth management. Liquidity policy also plays a crucial role in improving asset and wealth management practices, though its impact is moderate compared to economic fluctuations. These findings suggest that banks must adopt robust liquidity management and risk mitigation strategies to navigate periods of economic uncertainty and optimize asset and wealth management practices. The study provides important insights for banking professionals and policymakers aiming to enhance financial stability and operational efficiency in the banking sector.

Financial Performance of Banking in Indonesia: A Comparison Before and During the Covid-19 Pandemic

This research aims to examine the financial performance of the banking sector in Indonesia both before and during the pandemic. In the course of this investigation, financial performance was evaluated using several factors namely Loan to deposit ratio (LDR), non-performing loan (NPL), return on assets (ROA), as well as operating expenses and operating income (BOPO). Furthermore, the data used comprised information on the banking financial conditions before (2018-2019) and during the pandemic-affected periods (2020-2021). Purposive sampling was used for sample selection and the analytical methodology adopted comprised the Wilcoxon signed rank test and paired samples t-test analysis. It is also crucial to establish that the present research utilized statistical computations conducted via the Statistical Package for the Social Sciences (SPSS) application, with a significance level of 5%. The obtained results showed that no significant difference was identified between LDR and BOPO both before and during the pandemic. However, a substantial difference was identified between NPL and ROA over the two examined periods.

Development of a Green Banking and Green Financing Practice Model for Enhancing Sustainability Development Goals (SDGS)

Objective: This study is to investigate a green banking model based on green banking practices, green financing, and green environment to enhance sustainability development goals (SDGs). Theoretical Framework: The research focuses on developing green banking and financing practices to improve environmental performance in the Indonesian banking sector. Green Banking emphasizes sustainability in banking operations and products, while Green Financing promotes funding environmentally friendly projects. The study also draws on Stakeholder Theory, highlighting that banks are accountable to a wide range of stakeholders. Method: The research stages include the development of instruments, questionnaire distribution, data collection, and data processing using a sample of 54 respondents, selected using convenience sampling. Data testing and processing were carried out using SmartPLS software. Results and Discussion: The analysis of banking employees and practitioners revealed that Banks' Customer-Related Practices (BCRP), Employee-Related Practices (BERP), and Operation-Related Practices (BORP) positively impact Green Environment Performance (GEP), whereas Banks' Policy-Related Practices (BPRP) do not. Additionally, while BCRP, BERP, and BORP showed no significant influence on Green Financing (GF), BPRP demonstrated a notable positive effect on Green Financing (GF). This result also show that Studies on Bank’s customer behavior change towards sustainability and its influence on the SDGs. Research Implications: Banks can implement specific green practices to improve their sustainability development goals (SDGs). The study reinforces Sustainability Theory by highlighting the importance of balancing environmental, social, and economic concerns in banking operations, confirming the need for a "Triple Bottom Line" approach in business models. Originality/Value: The originality of the research is demonstrated through its Studies on Bank’s customer behavior change towards sustainability and its influence on the SDGs by integrating multiple theoretical perspectives.

Navigating Compliance: Regulatory Technology's Role in Anti-Money Laundering in Indonesia Banking

The financial sector system is unlawfully used for money laundering, which causes massive losses for the state and country. An essential component of successfully combating money laundering is regulatory technology (RegTech). This study aims to investigate the impact of implementing Electronic Know Your Customer (e-KYC), transaction monitoring (TM), cost and time efficiencies (CTE), regulatory compliance (RC), and technology information infrastructure (ITI), in money laundering preventing (MLP) in the banking sector in Indonesia. A quantitative method is used to explore the interplay of variables. The research sample consists of 50 owners of BRI Link agents. Data analysis is conducted using a linear regression model. The study's findings underscore the significant influence of TM, CTE, RC, and ITI on the effectiveness of PML, with CTE emerging as the most influential driver. Despite a moderately positive correlation among these factors, the e-KYC provided by regulatory technology (RegTech) does not exert a substantial impact on MLP. The implications of this research suggest that the adoption of RegTech, positively contributes to MLP efforts in banking institutions, highlighting the importance of utilizing technology and regulations to enhance Anti Money Laundry (AML) measures.

Digitalization and diversification strategies for effective bank liquidity management in emerging markets

The purpose of this study is to examine the impact of income, assets, and geographic diversity on bank liquidity in the Indonesian banking sector. This study uses purposive sampling and multiple regression analysis (MRA) to investigate the impact of digital banking on bank liquidity, as measured by the loan-to-deposit ratio (LDR) and liquidity ratio. The sample used is 87 banks in Indonesia, which include state-owned banks, commercial banks, regional development banks, and Islamic banks. The key findings of this study indicate that income and asset diversification significantly affect bank liquidity, with income diversification having a negative effect on the Loan-to-Deposit Ratio (LDR). The use of digital banking simplifies the relationship between diversification strategy and liquidity, thereby improving banks' ability to manage liquidity. However, despite digital integration, asset diversification continues to show an adverse correlation with liquidity, indicating limitations in its effectiveness. The study concludes that while digital banking enhances the effect of income diversification on liquidity management, it limits its effect on asset diversification. This suggests that digital utilization is a strategic resource for increasing liquidity, although it requires focused implementation. These findings offer important insights for bank management and policymakers in formulating digital transformation plans that enhance efficient cash management and financial stability, particularly in developing countries like Indonesia. Keywords: income diversification, asset diversification, digital banking, bank liquidity, financial stability.

Comparative Study on Stock Movement Prediction Using Hybrid Deep Learning Model

Applying machine learning techniques in stock market prediction has evolved significantly, with deep learning methodologies gaining prominence. Conventional algorithms such as Linear Regression and Neural Networks initially dominated but struggled to capture complex temporal dependencies in financial data. Recent research has explored deep learning architectures like LSTM and CNN and hybrids such as CNN-LSTM and LSTM-CNN, showcasing promising results. However, there's a gap in research comparing these models across different datasets, particularly in predicting stock movements. This study addresses this gap by conducting a comparative analysis of deep learning and hybrid models for stock movement prediction in the Indonesian banking sector. The evaluation based on RMSE and MAE reveals that the LSTM-CNN hybrid consistently outperforms other models, showcasing its versatility and accuracy across different data characteristics. Then, exploration through hyperparameter tuning demonstrates the criticality of parameter selection in optimizing model performance. These findings contribute to advancing predictive modeling in financial markets, offering valuable insights for investors, analysts, and policymakers. Further research in hyperparameter tuning and model optimization holds promise for enhancing accuracy and reliability in stock price prediction.

Pengaruh Kebijakan Dividen, Kepemilikan Manajerial, Kepemilikan Institusional terhadap Nilai Perusahaan Sektor Perbankan yang Terdaftar di Bursa Efek Indonesia

This study aims to determine the influence of dividend policies, managerial ownership, and institutional ownership, both partially and simultaneously, on the value of banking sector companies listed on the IDX for the period 2018-2022. Sampling in this study uses a purposive sampling technique. So that research data was obtained as many as 140 data samples. The type of research used is quantitative and analytical observational research design with a cross-sectional approach, which is a study with the aim of analyzing the dynamics of inter-effects and effects, by collecting time-lapse data at a certain time (point time approach). The analysis methods used are multiple linear regression analysis, F test, t test, and determination coefficient (R2). The results of the partial study show that dividend policy has a positive and significant effect on the value of companies in the banking sector in Indonesia, in 2018-2022. Meanwhile, management ownership and institutional ownership have no effect on the value of banking sector companies in Indonesia in 2018-2022. Simultaneously, dividend policies, institutional ownership, and management ownership have a significant effect on the value of companies in the banking sector in Indonesia in 2018-2022. The determination coefficient shows the magnitude of the variation in the dependent variable due to the variation of the independent variable of 11.3% The change in the variation in the company's value is due to the influence of dividend policy, institutional ownership, and management ownership. While the remaining 88.7% was influenced by other variables outside this study. Such as fiscal, monetary, or national political stability in its influence on the rise and fall of the company's value.

Indonesian Islamic Banks’ Post-Pandemic Profitability Alignment with Sustainability Goals

Purpose — The Islamic banking sector in Indonesia has recovered from the COVID-19 pandemic. Despite the sector’s resilience to the crisis, Islamic banks have lower levels of profitability than their conventional counterparts. They therefore need to optimise profitability as well as implement sustainability practices due to their high reliance on income from intermediary functions and their core principle of protecting life and preventing harm. This study aims to optimise the post-pandemic profitability of Indonesian Islamic banks while seeking to align profitability with sustainable development goals (SDGs). Design/Methodology/Approach — The model is developed based on the combination of linear programming and financial analysis, with constraints considering banking regulations and practices. The model highlights financing product types, financing fields of business, and types of deposit products that contribute to higher profits and support sustainability practices. Findings — The recommended financing product types, financing fields of business, and deposit product types lead to profitability growth of up to 85 per cent, even better than the pre-pandemic performance of Islamic banking and the overall Indonesian banking industry. This research also finds that Islamic banks’ strategy for profit optimisation is consistent with the increasing support for SDGs. Originality/Value — There is a lack of literature discussing the alignment of Islamic banks’ profit optimisation with the SDGs. This study contributes to the literature by aligning the Islamic banks’ profitability strategy with sustainable financing. Research Limitations/Implications — The study is expected to promote the implementation of sustainability practices as well as increase the profitability of Islamic banks, drawing from evidence in Indonesia.

Digital Marketing Effectiveness By Implementing Search Engine Optimization (SEO) In The Indonesian Banking Sector

This study evaluates the use of Search Engine Optimization (SEO) in digital marketing strategies within the Indonesian banking sector, specifically focusing on Bank Central Asia Tbk (BCA), Bank Mandiri Persero Tbk, and Bank Rakyat Indonesia Persero Tbk (BRI), during the period from February 2024 to April 2024. Employing an exploratory qualitative method, the research aims to gain an in-depth understanding of how these three banks implement SEO and how these strategies impact their customer engagement. The findings indicate that BCA utilizes Twitter as the primary platform for delivering rapid information, while Bank Mandiri and BRI prefer WhatsApp Web for direct and personal communication with customers. Additionally, BRI leverages video content on YouTube to enhance user engagement. The dominance of WhatsApp Web in social traffic for Bank Mandiri and BRI highlights the effectiveness of instant messaging platforms in building direct communication with customers. Conversely, Twitter proves effective in reaching a broader audience for BCA. This study emphasizes the importance of tailoring digital marketing strategies to suitable platforms to achieve specific business objectives and demonstrates the value of qualitative methods in understanding the dynamics and complexities of digital marketing within the banking sector.

Ethics in Artificial Intelligence in the Banking Sector in Indonesia

Ethics in Artificial Intelligence in the Banking Sector in Indonesia

Board of Commissioners, Chairman of Board of Directors, and Performance Audit Reports on Indonesian Banking Sector: The GMM System Approach

Board of Commissioners, Chairman of Board of Directors, and Performance Audit Reports on Indonesian Banking Sector: The GMM System Approach

The Mismatch Between Macroeconomic Stability and Declining Stock Performance of Digital Banks in Indonesia: An Empirical Study of 2022-2023

This study examines the mismatch between macroeconomic stability and the stock performance of digital banks in Indonesia over the period 2022-2023. The results of the analysis show that the USD/IDR exchange rate and Bank Indonesia interest rate have a significant negative effect on stock prices, while inflation shows no significant effect. These findings suggest that despite stable macroeconomic conditions, the share prices of digital banks experienced a significant decline, indicating market inefficiencies. This study makes a theoretical contribution by revealing the role of exchange rate and interest rate fluctuations in influencing the stock performance of digital banks in emerging markets. In conclusion, factors such as investor sentiment, market behavior, and the influence of digital financial technology need to be taken into account in developing strategies to support the stability and growth of the digital banking sector in Indonesia. The results of this study are important for policymakers, regulators, and market participants in dealing with the challenges faced by the digital banking sector in Indonesia. Keywords Digital banking, macroeconomic stability, stock performance, market inefficiency.

Analysis of Murabahah Financing in Sharia Banking (Bank BJBS KCP Arcamanik Case Study)

Murabahah is an agreement for the sale and purchase of an item where the seller states the selling price which consists of the cost price and a certain level of profit on the item where the selling price is agreed to by the buyer. The purpose of writing this article is to analyze the issue of murabahah financing in sharia banking. This research examines the banking sector in Indonesia as the focus of the study, especially in terms of solving practical operational problems through exploratory investigations. Three customers and three sharia bank employees were tested in the study material in Bank BJBS KCP Arcamanik's sharia banking research. The Sharia Supervisory Board has carried out good supervision and must carry out strict supervision so that murabahah financing is carried out in accordance with this concept. This is so that murabahah financing which is the foundation for sharia banking financing can continue to exist and not damage the reputation or image of sharia banking.

Impact of IFRS 9 Implementation and Audit Committee Effectiveness on Earnings Management in The Indonesian Banking Sector

Background- The implementation of IFRS 9, utilizing the Expected Credit Loss (ECL) method, along with effective oversight from the audit committee, can be a relevant strategy to anticipate earnings management practices. Purpose- to examine the impact of IFRS 9 implementation and audit committee supervision on restricting managerial discretion in loan loss provisions. Design/methodology/approach- This study will use a quantitative analysis method using secondary data from an annual report. The sampling method used in this study was purposive sampling, which resulted in selecting 42 banks listed on the Indonesian Stock Exchange from 2017 to 2022. This study uses the data panel analysis method with the STATA analysis tool. Findings- This research found that the implementation of IFRS 9 and audit committees had an impact on increasing bank managerial discretion. This explains that the implementation of IFRS 9 and the audit committee have not been able to limit managerial discretion, which may be due to the influence of unstable economic conditions due to the pandemic and countercyclical policy to anticipate the impact of the pandemic. Research limitation- The potential impact of the COVID-19 pandemic on research outcomes related to managerial discretion and the effectiveness of audit committee oversight. Originality/Value- To enhance the literature related to the trends of the impact of PSAK implementation in Indonesia on earnings management more comprehensively by extending the research period and contributing to the literature by employing multiple criteria to identify the quality of oversight provided by the audit committee.

Analisis Dinamika dan Keseimbangan Pembiayaan Bank Umum Syariah Dengan Pendekatan Error Correction Model

The study aims to analyze the dynamics and balance of financing of Islamic Commercial Banks in Indonesia during the period 2015-2023 with a focus on changes in monetary policy, real effective exchange rate, price level, profitability, and capital adequacy. The research method uses a quantitative approach with analysis techniques using the error-correction model (ECM) approach. The results showed that monetary policy, real effective exchange rate, profitability, and capital adequacy ratio have a significant influence on the financing of Islamic Commercial Banks in Indonesia in the long run. In contrast, the price level does not show a significant influence on financing in the long run. These results explain that macroeconomic factors and banking performance are crucial in determining the balance of financing in the Islamic banking sector in Indonesia. The findings suggest that changes in monetary policy, which often reflect overall economic conditions, can affect financing decisions in Islamic banks. In addition, fluctuating real exchange rates can affect the price competitiveness and financial position of banks. Profitability, as an indicator of financial health, and the capital adequacy ratio, as an indicator of a bank's ability to bear risk, were also found to have a significant influence, suggesting that the internal performance of Islamic banks is decisive in the financing provided.

The influence of psychological capital on innovative work behavior in islamic bank employees x

Background: In the face of intense business competition, organizations need continuous innovation in technology and services to remain competitive. This study explores how psychological capital—including self-efficacy, optimism, hope, and resilience—influences innovative work behaviour in the Islamic banking sector in Indonesia. This study aims to look at the effect of psychological capital on innovative work behaviors in employees of Bank Syariah X. Method: The sample used in the study was 135 employees working at Bank Syariah X. Innovative Work Behavior was measured using Innovative Work Behavior Indonesia version (2014). Psychological capital was measured using Psychological capital Questionnaire-24 (PCQ-24) (2007) with reliability coefficient 0.87. Findings: The results showed that there are two components of psychological capital that significantly influence the behavior of innovative work, namely self efficacy (β = .33, R2 = .21, p = .00) and hope (β = .21, R2 = .03, p = .00). Conclusion: This suggests that the components of self efficacy was the biggest influence on the innovative work behavior among employees who work at the Bank Syariah X. Novelty/Originality of this study: This research framework provides practical and measurable strategies that can be implemented by HR managers in the Islamic banking sector to drive innovation, improve employee performance, and ultimately enhance organizational competitiveness in the dynamic financial industry.

Analisis Faktor Pertumbuhan Kredit Bank Komersil Di Indonesia

This research analyzes the influence of Non-Performing Loans, Loan to Deposit Ratio, Loan Loss Provision, Equity Asset Ratio, Liquidity Ratio, Gross Domestic Product, Inflation, Interest Rate, Bank Capital, and Bank Size on Loan Growth Rate in banking companies listed on the Indonesia Stock Exchange (BEI) from 2019 to 2023. The method used is regression multiple panels with secondary data obtained through purposive sampling, covering 205 financial reports from 41 companies. The results of the analysis using Eviews 12 show that Non-Performing Loans, Loan to Deposit Ratio, Loan Loss Provision, Equity Asset Ratio, Liquidity Ratio, Gross Domestic Product, Inflation, Interest Rate, Bank Capital, and Bank Size have a significant influence on Loan Growth Rate. This research provides important insights into the factors influencing loan growth in the Indonesian banking sector, as well as implications for risk management and banking policy.