Email this article DETERMINANTS OF INDONESIAN STATE-OWNED BANK PROFITABILITY BEFORE, DURING, AND AFTER COVID-19
Abstract
The profitability of Indonesia’s four state-owned banks fluctuated considerably between 2015 and 2025, yet earlier studies of these banks neither cover the post-pandemic period nor combine bank-specific, macroeconomic, and pandemic determinants in one model. This study examines how credit risk, liquidity, capital, operating efficiency, interest margin, bank size, inflation, the BI-rate, GDP growth, and the COVID-19 pandemic are associated with the return on assets (ROA) of these banks. The sample covers BRI, BNI, BTN, and Bank Mandiri over 44 quarters from 2015Q1 to 2025Q4, giving 176 bank-quarter observations drawn from quarterly financial reports, Statistics Indonesia, and Bank Indonesia. A fixed effects model is estimated with bank-clustered standard errors and wild cluster bootstrap p-values, and Driscoll-Kraay standard errors are used as a robustness check. A one percentage point increase in the operating expense to operating income ratio (BOPO) is associated with a 0.077 percentage point lower ROA (p = 0.022), and ROA was 0.169 percentage points lower during the core pandemic period (p = 0.042). Bank size and GDP growth are also negatively associated with ROA, whereas the positive associations of the BI-rate and net interest margin are significant only under Driscoll-Kraay errors. NPL, LDR, CAR, and inflation show no significant association. Operating efficiency is therefore the most consistent correlate of state-owned bank profitability in this period, which points to cost management as a priority for these banks, although the evidence rests on only four banks.
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DOI: https://doi.org/10.20961/jaedc.v11i2.127063
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