Profitability Of Banks In Indonesia Research Articles

Influence of Macro Economic Factors, Banking Industry Factor, and Banking Specific Factors on Banking Profitability in Indonesia: Panel Data Analysis

This study aims to investigate the influence of macroeconomic factors, industry specific factors and specific factors in the bank's profitability of Indonesian banking. This research was conducted with a purposive sampling method, where the sample used is a bank listed on the Indonesia Stock Exchange and publicizing the full financial statements from 2006 to 2011. Based on those samples criteria, obtained samples of 18 banks. Data analysis method used in this research is the analysis of panel data. The analysis shows fixed effect method produces the best model for predicting the profitability of banks in Indonesia compared to method of pooled and random effect.The results are consistent with the theory underlying profitability of the bank, which was conducted by Ho and Saunders (1981), known by the dealership theory. The theory states that as financial intermediaries, bank expects to get a positive net interest margin (NIM) to face uncertainty generated by the unsynchronized between the deposits offers and credit demands. That consistency is shown with the support of the results of empirical testing of hypotheses related to the operating costs and capital adequacy for dependent variable which measured by the NIM. For the dependent variable of profitability as measured by ROA, consistency is supported by the empirical testing of hypotheses related to credit risk, operational costs, inflation and economic growth. The theory underlying negative impact of market concentration conducted by Bain (1951) known as the structure conduct performance theory is not supported by empirical results.

The Determinants of Commercial Bank Profitability in Indonesia

This paper seeks to examine the determinants of bank profitability in Indonesia. The sample used is a panel data of 25 publicly traded Indonesian commercial banks in 2007-2012 period. This research used Return on Assets (ROA) and Return on Equity (ROE) as proxies of profitability and analyze how variables from three categories that is internal, external, and market share variable affects them. We found some intriguing findings from this study, namely, the effect of CAR that we found to be negative towards profitability, which indicated that the capitals of Indonesian banks are beyond their optimal level. Then we found that Loan to Deposit ratio and Market Share of Credit, contrary to common sense, also demonstrated a negative effect, which appears to be caused by the 2008-2010 Global Financial Crisis. Last, we also found that Inflation positively affect profitability, which seemingly caused by a demand-pull type of inflation.

Analisis Pengaruh Net Interest Margin Dan Non Interest Income Terhadap Return On Asset Pada Badan Usaha Perbankan Di Bursa Efek Indonesia

The primary objective of this study is to determine which dominant factor to influence the profitability of banks in Indonesia. There are the two main factors that affect the profitability of the banks. The first one is Net Interest Margin as lo known as NIM and the second one is Non Interest Income also known as NII. Firstly, bank is in charge of collecting funds from the people and to channel it back to the community for various purposes. By doing this, Net Interest Margins are generated by the difference between saving rate and credit rate. Secondly, bank gains Non Interest Income by charging fee for banking services such as transfer fee, letter of credit, safe deposit box rental, etc. With higher Net Interest Margin and Non Interest Income, banks will achieve higher profitability. This research concludes that Net Interest Margin dominates over Non Interest Income in Indonesian’s banking. This research also concludes that Net Interest Margin and Non Interest Income can complement each other to increase banking sector profitability.

FAKTOR-FAKTOR PENENTU TINGKAT PROFITABILITAS BANK UMUM SYARIAH DI INDONESIA

This study aims to verify the impact of macroeconomic variables on Islamic commercial bank profitability in Indonesia. Applying the error correction models (ECM), this study involved a sample of 3 Islamic banks which are banks operating throughout the study period and the bank that issued the financial statements during the first quarter of 2006 until the third quarter of 2011. The results showed only a variable interest rate which affects the profitability of Islamic banks in Indonesia. Using the Dickey-Fuller (DF) and Augmented Dickey-Fuller (ADF) test, it is proven that there exists a dynamic relationship (long term cointegration) between gross domestic product, inflation, interest rate, market share, money supply and profitability Islamic commercial banks.