Funding Liquidity Risk, Bank Risk Taking, Capital Buffers and Bank Size (study on conventional banking and Sharia in Indonesia 2015-2019)

Abstract

This study aims to determine the effect of funding liquidity risk on bank risk taking as moderated by the capital buffer and the size of the bank. The research data was taken from a combination of the annual reports of Indonesian conventional and Islamic banking on the websites of each bank and the websites of the OJK with a total sample of 74 banks with a purposive sampling method. The results of this study indicates that the liquidity risk of funding does not directly affect the risk-taking behavior of the bank. However, the moderating variable of capital buffer and bank size limits the effect of funding liquidity risk on bank risk-taking behavior. A high capital buffer encourage banks to minimize the risks they take. Meanwhile, the size of the bank has the results of a study with a phenomenon in Indonesia, namely large banks tend to choose a bigger risk.