Banking Risk Analysis and Its Effect on Bank Performance in Indonesia

Bagus Aji Pratama, Agista Prameswari, Eka Dyah Pramusinta

Abstract


This research investigates the effect of various banking risks, including operational expense risk (BOPO), capital risk (CAR), liquidity risk (LDR), market risk (NIM), and credit risk (NPL) on a bank's Return on Assets (ROA). The study is a descriptive quantitative analysis, concentrating on the descriptive aspects through a quantitative perspective. The study focuses on a sample of 44 banking companies that are listed on the Indonesian Stock Exchange (BEI). Method of sample selection Purposive Sampling is a technique that relies on specific criteria set by the investigator, focusing on entities that submitted annual reports within the 2015-2019 timeframe and are registered on the Indonesian Stock Exchange, specifically involving 32 banks. The data for this study was obtained from secondary sources, specifically banking financial reports from 2015 to 2019. The results reveal that operational cost risk (BOPO) has a significant negative impact on ROA, as does capital risk (CAR). On the other hand, liquidity risk (LDR) demonstrates a positive, yet statistically insignificant, effect on ROA. Furthermore, market risk (NIM) and credit risk (NPL) both have a significant negative effect on ROA.


Keywords


BOPO; CAR; LDR; NIM; NPL; ROA

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DOI: https://doi.org/10.20961/bfde.v3i2.109709

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