Indonesian Banking Sector Research Articles

Analysis of the influence of corporate governance on the financial performance of Islamic banks in Indonesia 2016 - 2021

The reason of the cases is to analyze the impacts of ICG (Islamic Corporate Administration) on the monetary execution of Islamic Commercial Banks in Indonesia amid the period of 2017 to 2022 .The population for this study is made up of 15 Islamic Commercial Banks registered with OJK, and a purposive sampling technique is used to choose seven samples. This study employs a descriptive quantitative method by conducting simple regression tests to evaluate the partial impact of ICG regarding the financial results of Islamic banks. The Return on Assets (ROA) proxies the financial performance in this study. Banking in Indonesia is defined by Law No. 10 of 1998 as a business institution that gathers funds in the form of savings from the community and distributes them into financing and other activities that aim to improve the community's welfare. Islamic banks are one of the two types of banking in Indonesia, and they operate based on Shariah principles. The operation of Shariah banking is supported by Law No. 21 of 2008. In recent years, the number of Islamic banks in Indonesia has grown significantly, with a rise in the number of offices, banks, and assets. The research findings demonstrate that ICG very continuous, partially positive results for the Islamic commercial banking sector in Indonesia from 2017 to 2022. Integrating Islamic Corporate Governance principles into Corporate Governance principles shares the same objectives, including transparency and accountability. As a result, Additional exploration is recommended to examine alternative independent variables that could potentially impact the money related execution of Islamic commercial banks. The show investigate underscores the noteworthiness of ICG in expanding the monetary execution of Indonesian Islamic commercial banks.

Organizational ambidexterity: The role of technological capacity and dynamic capabilities in the face of environmental dynamism

Organizational ambidexterity has been widely established as necessary for economic sustainability in the financial services sector. Organizational ambidexterity is an organization's ability to be aligned and efficient in management to meet business needs while simultaneously adapting to environmental changes. To meet the challenges of the new digital economy, banking organizations require substantial technological changes and must also recognize that the banking business itself is one of technology. Organizational ambidexterity is essential for financial sector businesses, but their relationship and relative merits are unclear. This research focuses on the role of technological capacity and dynamic capability of the banking sector in Indonesia in an effort to achieve organizational ambidexterity in the face of a dynamic environment. This research uses quantitative methods by surveying leaders from Indonesian commercial banks and analyzed using the SMART PLS program. Our investigation found that technological capacity influences organizational Ambidexterity, with the link becoming stronger when mediated by an organization's dynamic capability. In the meantime, environmental dynamism has no impact on the organizational ambidexterity of the banking sector in Indonesia. Our findings also indicate that the associated security risk will increase if a bank improves its technological capacity in a highly dynamic environment. This paper is an empirical study of technological capacity and presents a method for creating organizational ambidexterity through dynamic capability, especially in the banking sector.

Determinants of Bank-Specific and Macroeconomic on Profitability of Regional Bank in Indonesia

Regional Bank Profitability is one of challenging issues in Indonesian banking sector. Banking sector is lack generating higher profit then banks will get default and the effect shows to economy sector of each country. The source of data obtained from annual report of regional development banks (BPD) website and financial reports. This research covers the data over the period 2015-2019. This study includes major BPD banks of Indonesia. The analysis technique used to analyze the data in this study is done by classic assumption test, the multiple regression analysis. GDP is negative and significant, but Inflation is negative but not significant affect to profitability. Similarly, Banks specific variables Bank Size, CAR and BOPO. Finding shows that Bank size, CAR and BOPO are negative and significant to bank profitability.

The Role of Independent Value Creation, Value, and Trust on Banking Marketing Performance: Moderating Role of Gender

Research aims: The paper aims to examine independent value creation (IVC) and its implication on value, trust, and marketing performance (satisfaction and loyalty) in the banking sector in Indonesia. The research model was developed from the existing literature to show the relationship between IVC and marketing performance.Design/Methodology/Approach: A survey design was used in this investigation, and the questionnaire collected study data. The data were analyzed from 385 respondents selected by purposive sampling and taken from bank customers. PLS-SEM analysis was used for hypothesis testing, and multi-group analysis was performed for moderating testing.Research findings: The findings demonstrated a strong positive link between IVC and marketing performance – satisfaction and loyalty. It was also found that learning value and trust partially mediated the relationship. Moreover, gender moderated the relationship between IVC and customer satisfaction and trust.Theoretical contribution/Originality: This study provides an academic contribution to explaining IVC and its role in value, trust, and marketing performance. The impact of IVC is further demonstrated by the role of gender moderation, which contributes to the Service-Dominant Logic (S-D Logic) literature by providing additional context.Practitioner/Policy implication: The study suggests that managers should pay attention to what customers do independently in value creation. They should also alter their perspective of the source of competitive advantage by shifting to customer activities in finding bank services. Furthermore, the impact of IVC on satisfaction and trust needs to consider the role of gender.Research limitation/Implication: The sampling technique limited the generalization of findings, and IVC measurement needs to be explored in future research.

The Role of Dividend Policy in Explaining Corporate Governance and Profitability on Firm Value

This study aims to determine the effect of corporate governance and profitability on dividend policy based on substitution theory and/or outcome theory in the banking sector in Indonesia. Theoretically, this study contributes which theory is more dominant between substitution theory and outcome theory by linking the influence of corporate governance with dividend policy and providing information about the impact of the application of the theory on firm value and build awareness to be careful of investors. Investors in making investment decisions, especially in the banking industry in Indonesia. In addition, this study also examines the role of dividend policy in explaining the relationship between corporate governance and profitability on the value of banking firms. A sample of 135 observational data comes from 27 banking companies during 2016-2020. This research found that corporate governance has a negative and significant influence on dividend policy. In addition, the CG index is one of the factors that can explain the company's market value. Profitability is empirically proven to influence dividend policy. Dividend policy is proven to play a role in mediating the relationship between profitability and firm value. However, it is empirically proven that dividend policy cannot mediate the relationship between corporate governance and firm value.

Digitalization of Banking and Financial Performance of Banking Companies

This study aims to identify the impact of bank digitization on the financial performance of companies in the Indonesian banking sector. The study uses his three-year (2018-2020) panel data of banking companies listed on the Indonesia Stock Exchange, covering 40 banks and 120 observations. Data were analyzed using panel data regression with a fixed effects model. The analysis tool used in this study is Eviews version 10. The results of this study show that the application of banking digitalization in the form of digital technology adaptation in banking firms has a negative impact on financial performance as measured by return on investment. These results highlight that the use of digital technology failed to improve the financial performance of Indonesian banks. As factual information, the study serves as the basis for decisions regarding the application of digital technology in banking companies. Investors are especially careful when investing in companies that use digital technology.

EVALUASI SISTEM PROSEDUR PEMBERIAN KREDIT DI LEMBAGA PERBANKAN

Corporate governance in the world of economics is something that is considered as important as what happened in the state government. This study examines how the principles of Good Corporate Governance relate to credit granting procedures in banking institutions at PT. State Savings Bank (Persero) Tbk. This research is case study research conducted at a private company engaged in the banking sector in Indonesia. The aim of this research is to determine the relationship between the application of the principles of corporate governance (GCG) to credit granting procedures within the company. Corporate Governance as a set of rules that determines the relationship between shareholders, management, creditors, government, employees, and other internal and external stakeholders with respect to their rights and obligations, or in other words a system that directs and controls the company. Where there are five principles of Good Corporate Governance, namely: a) Information transparency, b) Accountability, c) Responsibility, d) Independence, e) Fairness. Data collection methods used in this research are interviews and analysis of company documents. The results of this study indicate that there is an important role between GCG implementation and credit granting procedures. The results of this study encourage and motivate companies so that GCG principles are used as a corporate culture.

Does capital adequacy ratio matter during the Covid-19 outbreak? Evidence on state-owned banks in Indonesia

The Covid-19 epidemic has brought significant changes in the financial performance of the Indonesian banking sector. Weak economic indicators lead to a reduction in bank capital due to insufficient working capital loans. This study was conducted to find out changes in the capital adequacy ratio of state-owned banks in Indonesia during the Covid-19 pandemic. The data set is based on quarterly financial reports of state-owned banks for the 2020-2021 period. We prove that lending and NPL have an effect on CAR. In condition, there was a significant decrease in credit and a significant increase in non-performing loans starting in the third quarter of 2020 and increased slightly in the third quarter of 2021. Meanwhile, the capital adequacy ratio tends to be stable, because the government has strengthened bank capital. The study shows that state-owned banks can maintain CAR consistently and safely. This level of safe defense increases capital consistently in line with growth in lending while maintaining banking industry regulations.

Do Corporate Social Responsibility and Political Connections Matter to Financial Performance and Financial Stability in the Banking Sector? Evidence from Indonesia

This study aims to determine the effect of Corporate Social Responsibility and political connections on financial performance and financial stability in the banking sector in Indonesia. Corporate Social Responsibility is widely seen as a form of the company's commitment to society, which can encourage sustainability. Meanwhile, political connections are seen as capable of maintaining the financial stability of banking companies, especially in countries with high levels of corruption and weak laws. The sample in this study were 26 banking companies listed on the Indonesia Stock Exchange for the period 2017-2020. The method used in sampling is purposive sampling method, with secondary data in the form of financial statements and company annual reports during the study period. This study uses a combined least squares regression analysis technique. The results showed that Corporate Social Responsibility had a positive effect on financial performance and had no effect on financial stability, while political connections had a negative effect on both financial performance and financial stability. This shows that banks that have political connections do not make people more trusting. Thus, the company's image in society becomes more important than political connections.

Personal Selling Strategies by Relationship Managers in the Indonesia Banking Sector

This research was conducted to identify the stages in the personal selling process carried out by Relationship Managers in the Banking Sector in the Digital Age. With a qualitative approach, the data collection method is to conduct interviews with four RM practitioners at private and government banks in Salatiga City. The results of this study show that RM practitioners apply a personal selling strategy in marketing banking products, including the prospecting, the approach, the sales presentation, overcoming objection, closing and follow-up service stages. In this study, it can be concluded that RM practitioners still carry out face-to-face approaches and use e-sales kits as a form of using technology in the digital era.

BANK REGULATION AND STABILITY: LESSON LEARNED FROM THE INDONESIAN BANKING SECTOR

This study aims to investigate the impact of bank regulations on bank stability. This study holds crucial significance in Indonesia’s long regulation journey within a bank-based economy to maintain stability in various business cycles, including the Asian financial crisis. Additionally, although the capitalization of the Indonesian banking sector is the highest among the G-20 countries, the capitalization of these more than 100 banks varies widely and is concentrated among large banks. Thus, it is necessary to implement the capital requirement policy meticulously. This study examines the impact of bank regulations in terms of capital requirement and bank capitalization on bank stability using a sample of Indonesian commercial banks and employs a dynamic panel regression. We expect to improve from the previous study by using the research period from 2001 to 2019 that captures different business cycles, analyzing three of Indonesia’s bank regulations, and providing further analysis by incorporating the role of bank market power and size in the relationship between bank capital and bank stability. The results show that capital discipline implemented in the capital requirements significantly supports bank stability. Furthermore, the findings show that low-to-middle capitalization banks are associated with weak bank stability in terms of solvency. However, low-capitalized banks tend to be more prudent in granting credit, so exposure to credit risk is low. Moreover, this study reveals that market power and size strengthen the impact of capital on bank stability. However, such an influence should be accompanied by intense supervision to avoid credit risk exposure.

Consumers’ awareness and loyalty in Indonesia banking sector: does emotional bonding effect matters?

PurposeThis study aims to examine the relationship between emotional bonding (e.g. brand love, brand commitment and brand trust) and consumers’ awareness and consumers loyalty to conventional and Islamic banking products in Indonesia.Design/methodology/approachThe sample consists of 585 Muslim and bank consumers obtained through a survey study and using structural equation modeling to test the research hypotheses.FindingsThe empirical results indicate that brand love, commitment and trust have significant and positive effects on consumers’ awareness and loyalty. Furthermore, as the mediator variables, consumers’ awareness partially mediates the relationship between emotional bonding and consumers’ loyalty.Research limitations/implicationsThis study was validated by Indonesian Muslims; therefore, future study is needed to validate across the region and sector.Practical implicationsThis study enlightened the bank managers from a marketing and psychological context. The bank managers need to enhance the control and promote their brand and products to improve their relationship and consumers.Originality/valueThis study provided the Muslim consumers' decision-making process by developing and testing a model of emotional bonding and consumers’ perspective toward bank products.

Corporate Digital Competencies for Digital Banking Innovation: Case Studies in Indonesian Banking Sector

Banking sector in Indonesia has enormous potential to grow. The large unbanked population, quick mobile & internet penetration, and advancement of digital technologies have propelled a fast-moving trend toward digital banking innovation. Banks and other financial service providers in Indonesia are anticipating this trend by preparing a roadmap to convert their business models, products, and services into full or partial digital financial propositions to meet the new customer’s expectations. This study investigates the required digital competencies at a corporate level that banking organizations need to prepare prior to stepping into digital transformation. Four Indonesian banks with different states of digital transformation have been selected as case studies for this qualitative study. This is an ongoing study, nevertheless, some initial findings and observations will be presented. While several previous research have discussed some parts of this study, the authors believe that no past research presented the whole set of corporate digital competencies especially in digital banking context. The outcome of this study is expected to be of value to the academics as well as to business.

Detecting Fraudulent Financial Reporting Using the Fraud Hexagon Model: Evidence from the Banking Sector in Indonesia

The purpose of this study was to examine the potential for fraudulent financial reporting using the fraud hexagon theory factors such as stimulus (financial target, financial stability, and external pressure), capability (change in director), collusion (total board of commissioners who have multiple positions), opportunity (ineffective monitoring), rationalization (auditor switching), and arrogance (frequency of the number of photos of the chief executive officer (CEO) in the annual financial statements) affect fraudulent financial reporting. The sample of this study comprises banking companies listed on the Indonesia Stock Exchange (IDX) in 2017–2021, with a total sample of 215 and data processing using SPSS 25 software. The results of this study indicate that external pressure and arrogance affect fraudulent financial reporting. However, financial targets, financial stability, ineffective monitoring, auditor switching, change in director, and collusion do not affect fraudulent financial reporting. Therefore, for a company to have a system for preventing the occurrence of embezzlement, the company has to create a system of detection, monitoring, and systems review policies in the field of human resources (HR).

The Role of Audit Committee Characteristics and I.C. Performance on I.C. Disclosure: Evidence from the Indonesian Banking Sector

This study aims to analyze the influence of audit committee characteristics and intellectual capital performance on intellectual capital disclosure. Characteristics of the audit used in this research are the size of the audit committee, the Number of audit committee meetings, and the financial expertise of the audit committee. The population in this study is a financial services company listed on the Indonesia Stock Exchange in 2019–2021 and collected a sample of 91 companies using the purposive sampling technique. The analysis method used in this research is multiple linear regression using the software SPSS 20. The test result of this study shows that an audit committee or several audit committees positively affect intellectual capital disclosure. However, at the same time, the financial expertise of the audit committee and intellectual capital performance does not affect intellectual capital disclosure.

Determinant Factors Effect of the Indonesia’s Banking Sector Share Prices in 2005 QII - 2019 QIV Period

This study aims to determine the effect of interest rates, money supply, inflation, exchange rates, and return on assets (ROA) on stock prices in the banking sector for the 2005 QII – 2019 QIV period. The data used are quarterly time series. The method of analysis used the Vector Error Correction Model (VECM). The result of this study indicate that the interest rates has a negative and insignificant effect on stock prices in the banking sector. However, money supply, inflation and return on assets have a positive effect and significant effect to the stock price of the banking sector in Indonesia.

Determinant Factors Effect of the Indonesia's Banking Sector Share Prices in 2005 QII - 2019 QIV Period

Determinant Factors Effect of the Indonesia's Banking Sector Share Prices in 2005 QII - 2019 QIV Period

Investigating Banking Profitability: Evidence from Commercial Banks in Emerging Country

We empirically analyse the determinants of commercial banking profitability in Indonesia for the period 2014-2018. We contribute to the growing literature in practical ways, first we propose suggestion to the business of the commercial banking sector in Indonesia, especially in decision-making of financial condition, in order to maximize the performance of the company and shareholders, so that the banking company's shares can continue to survive and have large returns. Also, it is expected to provide insight and knowledge about the extent to which the relationship between the banking sound’s level variable and its Profitability. The sample in this study amounted to 17 banking companies. This study uses purposive sampling method and we apply multiple linear regression approach with SPSS. We found that credit portfolio quality has a negative and significant effect on profitability, bank solvency has a positive and significant effect on profitability, interest level has a positive and insignificant effect on profitability. Efficiency ratio has a negative and insignificant effect on profitability, and liquidity has a positive and insignificant effect on profitability.
 
 Keywords: bank profitability, emerging economy, credit quality, solvency, interest margin, efficiency

Comparison Analysis of ASEAN Banking Financial Performance During the Pandemic

The arrival of the Covid-19 Pandemic outbreak has had an impact on the collapse of the local economy. The macroeconomics used in this theory explains the relationship between the current economic situation and how it affects banking financial performance with the RGEC indicators were used in this study to compare the financial performance of Indonesia's banking sector with other ASEAN countries, such as Brunei Darussalam, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. This research is a component of comparative research. The subject of the study is ASEAN banking institutions. Sampling with the purposive sampling method in 2019 and 2020 obtained 13 banks produced a complete sample. The parametric homogeneity test is used to test hypotheses in statistical models. The findings show that although there were differences in profit risk and risk profiles of ASEAN banks during the pandemic, there was no difference in capital risk.

Efficiency, Performance, Potential Improvement And Dual Banking Analysis of BPR & BPRS In West Java

SMEs are crucial to reviving the national economy in times of economic globalization and the Covid-19 pandemic. One of the tactics required to boost the competitiveness of MSMEs is to take use of efficient financing options offered by banks. This study compares the effectiveness, effectiveness, and improvement potential of BPR and BPRS in West Java and their applicability to MSMEs. Data Envelopment Analysis (DEA) is the analysis employed, and the study period is from 2016 to 2021. The banking sector in Indonesia includes BPR and BPRS. In order to successfully navigate the era of economic globalization and national economic recovery, it is critical to assess the degree to which these two banks can collaborate in the best possible way to promote increased prosperity and competitiveness of MSMEs, primarily through productive financing. In West Java, 20 BPRs and 20 BPRS served as the research samples. The information used is secondary information gleaned from each bank's annual financial reports for the years 2016 through 2021. The study's input variables are third-party money, operating costs, and fixed assets. Operating income and provided funding are additional output variables. The findings of this study demonstrate that efficiency trends for BPR and BPRS in West Java varied across the study period of 2016–2021. While BPRS saw a considerable reduction throughout the epidemic, West Java's BPR efficiency remained constant. Furthermore, in West Java, BPRs are more efficient than BPRS when comparing the two types of banks. This study also examines potential changes that could be made to programs to reduce input and output-related inefficiencies. Furthermore, the output variables, notably the financing variables offered, are generally the root of the two types of banks' most important inefficiencies. Additionally, this study makes recommendations to academics, practitioners, and regulators.