Determinants of Profitability on Indonesian’s Small Commercial Banking
(1) Universitas Negeri Malang
(2) Universitas Negeri Malang
(3)
(4)
Abstract
Purpose: The objective of this study is to decide whether the profitability of small banks is shaped by bank-specific and macro economic factors including liquid ratio, loan to deposits ratio, deposit to assets ratio, capital adequacy ratio, firm size, GDP growth, and inflation.
Method: The sample selected using purposive sampling technique as many as 77 units of analysis consisting of 42 banks in the BUKU 1 category and 35 banks in the BUKU 2 category registered with OJK since 2014-2019. After eliminated the outlier data, there were 413 observations as panel data. The analytical method used in this study is the regression panel fixed effect model and random effect model.
Findings: The results indicate that liquidity and loan to deposit ratio positively affects small banks profitability in Indonesia. Meanwhile, size, deposit to asset ratio, capital adequacy ratio, and GDP growth negatively affects profitability. Nevertheless, inflation does not affect profitability. This study mention that small bank’s managers need to deal with and take notice to the bank operational well i.e liquidity and loan to deposit ratio.
Novelty: This research investigates the outcome of bank-specific and macro economic factors on profitability in small banks period 2014-2019. The earlier research only check-out those variables solely and spotlight on distinctive samples and distinctive period. This study has implication for banking sector especially for small bank to pay more attention, strengthen, and maintain the exis- tence of their business through several ways, increasing and optimizing the level of equities owned to make assets increase and the cost of the funding structure becomes optimal.
Keywords
Full Text:
PDFReferences
Ahmad, G. N. (2015). Determinan profitabilitas bank: studi kasus pada bank pembangunan daerah. Jurnal Keuangan Dan Perbankan, 19(3), 431–438. https://doi.org/10.26905/jkdp. v19i3.41
Alarussi, A. S., & Alhaderi, S. M. (2018). Factors affecting profitability in Malaysia. Journal of Economic Studies, 45(3), 442–458. https://doi.org/10.1108/JES-05-2017-0124
Ali, K., Akhtar, M. F., & Ahmed, H. Z. (2011). Bank-Specific and Macroeconomic Indicators of Profitability - Empirical Evidence from the Banks of Pakistan. International Journal of Business and Social Science, 2(6), 235–242.
Ali, M., & Puah, C. H. (2018). Does bank size and funding risk effect bank’s stability? a lesson from Pakistan. Global Business Review, 19(5), 1166–1186. https://doi. org/10.1177/0972150918788745
Almazari, A. A. (2014). Impact of Internal Factors on Bank Profitability: Comparative Study between Saudi Arabia and Jordan. Journal of Applied Finance & Banking, 4(1), 125–140.
Alper, D., & Anbar, A. (2011). Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Empirical Evidence from Turkey. Business and Economics Research Journal, 2(2), 139–152.
Alshatti, A. S. (2015). The Effect of the Liquidity Management on Profitability in the Jordanian Commercial Banks. International Journal of Business and Management, 10(1), 62–71. https://doi.org/10.5539/ijbm.v10n1p62
Anggari, N. L. S., & Dana, I. M. (2020). The effect of capital adequacy ratio, third party funds, loan to deposit ratio, bank size on profitability in banking companies on IDX. American Journal of Humanities and Social Sciences Research (AJHSSR), 4(12), 334–338.
Anggraeni, D. (2015). Pengaruh Current Ratio, Quick Ratio, Debt to Equity Ratio Dan Ukuran Perusahaan Terhadap Kinerja Perusahaan (Studi Empiris Pada Perusahaan Manufaktur Sub Sektor Makanan dan Minuman yang terdaftar di Bursa Efek Indonesia Periode 2012-2014). Jurnal Akuntansi Dan Keuangan, 4(2), 219–239. https://doi.org/10.36080/jak.v4i2.402
Athanasoglou, P. P., Brissimis, S. N., & Delis, M. D. (2008). Bank-specific, industry-specific and macroeconomic determinants of bank profitability. Journal of International Financial Markets, Institutions and Money, 18(2), 121–136. https://doi.org/10.1016/j. intfin.2006.07.001
Bolarinwa, S. T., Akinlo, A. E., & Onyekwelu, U. L. (2021). Determinants of firm profitability in Africa. Global Business Review. https://doi.org/10.1177/09721509211046336
Chou, T.-K., & Buchdadi, A. D. (2016). Bank performance and its underlying factors: a study of rural bank in Indonesia. Accounting and Finance Research, 5(3), 55–63. https://doi. org/10.5430/afr.v5n3p55
Curak, M., Poposki, K., & Pepur, S. (2012). Profitability Determinants of the Macedonian Banking Sector in Changing Environment. Social and Behavioral Sciences, 44, 406–416. https://doi. org/10.1016/j.sbspro.2012.05.045
Djawoto, D. (2010). Peramalan Laju Inflasi dengan Metode Auto Regressive Integrated Moving Average (ARIMA). EKUITAS: Jurnal Ekonomi Dan Keuangan, 14(4), 524–538. https://doi. org/10.24034/j25485024.y2010.v14.i4.176
Dodi, Supiyadi, D., & Arief, M. (2018). Islamic bank profitability: a study of Islamic bank in Indonesia. The International Journal of Business Review, 1(1), 51–62. https://doi. org/10.17509/tjr.v1i1.12291
Durguti, E., Zhuja, D. A., & Arifi, E. (2014). An examination of the net interest margin as a determinant of banks’ profitability in the Kosovo banking system. European Academic Research, II(5), 6350–6364. https://doi.org/10.13140/RG.2.2.24588.46720
Fahmi, I. (2015). Manajemen Perbankan: Konvensional dan Syariah. Mitra Wacana Media.
Fiscal, Y., & Lusiana, L. (2014). Pengaruh Capital Adequacy Ratio (CAR), Loan To Deposit Ratio (LDR), Biaya Operasional Dan Pendapatan Operasional (BOPO) Terhadap Profitabilitas BPR (Studi Kasus pada BPR di Provinsi Lampung Tahun 2010 - 2012). Jurnal Akuntansi & Keuangan, 5(2), 127–158. https://doi.org/10.36448/jak.v5i2.548
Gyamerah, I. A., & Amoah, B. (2015). Determinants of bank profitability in Ghana. International Journal of Accounting and Financial Reporting, 5(1), 173–187. https://doi.org/10.5296/ijafr.v5i1.7368
Harun, U. (2016). Pengaruh Ratio-Ratio Keuangan CAR, LDR, NIM, BOPO, NPL Terhadap ROA. Jurnal Riset Bisnis Dan Manajemen, 4(1), 67–82.
Hasan, M. S. A., Manurung, A. H. M., & Usman, B. (2020). Determinants of bank profitability with size as moderating variable. Journal of Applied Finance & Banking, 10(3), 153–166.
Hayati, N., & Musdholifah. (2014). Determinan Profitabilitas Perbankan Nasional Di Indonesia. Jurnal Bisnis, Manajemen & Perbankan, 1(1), 77–96. https://doi.org/10.21070/jbmp.v1i1.266
Helms, B. (2006). Access for all: building inclusive financial systems. World Bank. Jadah, H. M., Alghanimi, M. H. A., Al-Dahaan, N. S. H., & Al-
Husainy, N. H. M. (2020). Internal and external determinants of Iraqi bank profitability. Banks and Banks Systems, 15(2), 79–93. https://doi.org/10.21511/bbs.15(2).2020.08
Javaid, S., Anwar, J., Zaman, K., & Ghafoor, A. (2011). Determinants Of Bank Profitability In Pakistan: Internal Factor Analysis. Mediterranean Journal of Social Sciences, 2(1), 59–78.
Kajola, S. O., Sanyaolu, W. A., Alao, A., & Ojunrongbe, O. J. (2019). Liquidity and profitability dynamics: evidence from the Nigerian banking sector. Accounting and Taxation Review,
(2), 1–12.
Karim, B. K., Mohamed Sami, B. A., & Hichem, B.-K. (2010). Bank-specific, Industry-specific and Macroeconomic Determinants of African Islamic Banks’ Profitability. International Journal of Business and Management Science, 3(1), 39–56. https://doi.org/search.informit. org/doi/10.3316/informit.762462165033903
Kasmir. (2012). Manajemen Perbankan (Edisi Revi). PT RajaGrafindo Persada.
Komara, A., Hartoyo, S., & Andati, T. (2016). Analisis Pengaruh Struktur Modal Terhadap Kinerja Keuangan Perusahaan. Jurnal Keuangan Dan Perbankan, 20(1), 10–21. https://doi. org/10.26905/jkdp.v20i1.141
Lipunga, A. M. (2014). Determinants of Profitability of Listed Banks in Developing Countries: Evidence from Malawi. Research Journal of Finance and Accounting, 5(6), 41–49.
Madugu, A. H., Ibrahim, M., & Amoah, J. O. (2020). Differential effects of credit risk and capital adequacy ratio on profitability of the domestic banking sector in Ghana. Transnational Corporations Review, 12(1), 37–52. https://doi.org/10.1080/19186444.2019.1704582
Makadok, R. (2011). The four theories of profit and their joint effects. Journal of Managemenet, 37(5), 1316–1334. https://doi.org/10.1177/0149206310385697
Meidiyustiani, R. (2016). Pengaruh Modal Kerja, Ukuran Perusahaan, Pertumbuhan Penjualan dan Likuiditas Terhadap Profitabilitas Pada Perusahaan Manufaktur Sektor Industri Barang Konsumsi Yang Terdaftar di Bursa Efek Indonesia (BEI) Periode Tahun 2010 – 2014. Jurnal Akuntansi Dan Keuangan, 5(2), 41–59. https://doi.org/10.36080/jak.v5i2.405
Muin, S. A. (2017). Analisis faktor-faktor yang memengaruhi rentabilitas pada PT. Bank Rakyat Indonesia (persero) tbk. periode 2011-2016. Jurnal Economix, 5(2), 137–147.
Mukhlis, I. (2012). Kinerja Keuangan Bank dan Stabilitas Makroekonomi Terhadap Profitabilitas Bank Syariah Di Indonesia. Jurnal Keuangan Dan Perbankan, 16(2), 275–285. https://doi. org/10.26905/jkdp.v16i2.1068
Nguyen, T. H. (2020). Impact of bank capital adequacy on bank profitability under basel II accord: evidence from Vietnam. Journal of Economic Development, 45(1), 31–46.
Noman, A. H. M., Chowdhury, M. M., Chowdhury, N. J., Kabir, M. J., & Pervin, S. (2015). The effect of bank specific and macroeconomic determinants of banking profitability: a study on Bangladesh. International Journal of Business and Management, 10(6), 287–297. https:// doi.org/10.5539/ijnm.v10n6p287
Octavio, D. Q., & Soesetio, Y. (2019). Intellectual capital and bank profitability: Evidence from conventional and Islamic bank in Indonesia. Jurnal Keuangan Dan Perbankan, 23(2), 191–205. https://doi.org/10.26905/jkdp.v23i2.3028
Ongore, V. O., & Kusa, G. (2013). Determinants of Financial Performance of Banks in Kenya. International Journal of Economics and Financial Issues, 3(1), 237–252.
Panjaitan, H. P. (2011). Variabel Internal dan Eksternal Terhadap Kinerja Keuangan dan Nilai Perusahaan Sektor Perbankan. Jurnal Keuangan Dan Perbankan, 15(3), 405–415. https:// doi.org/10.26905/jkdp.v15i3.1033
Petria, N., Capraru, B., & Ihnatov, L. (2015). Determinants of banks’ profitability: evidence from EU 27 banking systems. Procedia Economics and FInance, 20, 518–524. https://doi. org/10.1016/S2212-5671(15)00104-5
Prasanto, O., Wulandari, D. N., & Kamaludin, M. (2020). Determinants of bank profitability: a new evidence from state-owned banks in Indonesia. Trikonomika, 19(1), 29–35. https://doi.org/10.23969/trikonomika.v19i1.1443
Priya, K., & Velnampy, T. (2013). Efficiency and Profitability: A Case Study of Banking Sector in Sri Lanka. Global Journal of Management and Business Research Accounting and Auditing, 13(5).
Rahman, H., Yousaf, M. W., & Tabassum, N. (2020). Bank-specific and macroeconomic determinants of profitability: a revisit of Pakistani banking sector under dynamic panel data approach. International Journal of Financial Studies, 8(42). https://doi.org/10.3390/ ijfs8030042
Rahman, M., Hamid, K., & Khan, A. M. (2015). Determinants of bank profitability: empirical evidence from Bangladesh. International Journal of Business and Management2, 10(8), 135–150. https://doi.org/10.5539/ijbfm.v10n8p135
Rahmawati, R. W., Zulaihati, S., & Fauzi, A. (2021). Pengaruh LDR, NPL, dan ukuran perusahaan terhadap profitabilitas bank yang terdaftar di Otoritas Jasa Keuangan (OJK). Jurnal Akuntansi, Perpajakan Dan Auditing, 2(2), 280–294.
Riaz, S., & Mehar, A. (2013). The impact of Bank Specific and Macroeconomic Indicators on the Profitability of banks. The Romanian Economic Journal, 16(47), 91–110.
Saeed, M. (2014). Using Loan-to-Deposit Ratio to Avert Liquidity Risk: A Case of 2008 Liquidity Crisis. Research Journal of Finance and Accounting, 5(3), 75–80.
Saleem, A., & Ashfaque, M. (2020). An analysis of profitability determinants of Islamic banks: empirical study of Malaysia vs Pakistan. International Journal of Business Reflections, 1(2), 142–164.
Salvatore, D. (2019). Managerial Economics in Global Economy (9th Editio). Oxford University Press.
Samsul, M. (2015). Pasar Modal dan Manajemen Portofolio. Penerbit Erlangga.
Sanyal, R. (2019). Profit Theory. Amity University.
Satoto, S., & Budiwati, S. (2013). Pergerakan Harga Saham Akibat Perubahan Nilai Tukar, Inflasi, Tingkat Bunga, Dan Gross Domestic Product. Jurnal Keuangan Dan Perbankan, 17(3), 407–416.
Shahchera, M. (2012). The Impact of Liquidity on Iranian Bank Profitability. Journal of Money and Economy, 7(1), 139–160.
Singh, A., & Sharma, A. K. (2016). An Empirical Analysis Of Macroeconomic And Bank-Specific Factors Affecting Liquidity Of Indian Banks. Future Business Journal, 2, 40–53. https://doi. org/10.1016/j.fbj.2016.01.001
Soares, P., & Yunanto, M. (2018). The effect of NPL, CAR, LDR, OER and NIM to the banking return on asset. International Journal of Economics, Commerce and Management, 6(3), 40–55.
Sugiarto, & Lestari, H. S. (2017). Faktor-Faktor Yang Mempengaruhi Profitabilitas Bank Pada Bank Konvensional Yang Terdaftar di Bursa Efek Indonesia. Jurnal Manajemen Dan Pemasaran Jasa, 10(2), 267–280. https://doi.org/10.25105/jmpj.v10i2.2510
Sukirno, S. (2015). Makroekonomi: Teori Pengantar (Edisi Keti). PT RajaGrafindo Persada.
Sultan, K., Ahmed, R. R., Ameen, F. M., & Singh, M. (2020). The Effect Of Macroeconomic & Bank Specific Factors On Banks Profitability: An Empirical Evidence From Banking Industry Of Pakistan. Humanities & Social Sciences Reviews, 8(3), 635–645. https://doi.org/10.18510/hssr.2020.8368
Sutrisno, B. (2018). Determinan Profitabilitas Bank Umum Terdaftar di Bursa Efek Indonesia. Jurnal Bisnis Dan Manajemen, 8(1), 41–48. https://doi.org/10.15408/ess.v8i1.6554
Suu, N. D., Luu, T.-Q., Pho, K.-H., & McAleer, M. (2020). Net interest margin of commercial banks in Vietnam. Advances in Decision Sciences, 24(1), 1–27. https://doi.org/10.47654/v24y2020i1p1-27
Tan, Y., & Floros, C. (2012). Bank profitability and GDP growth in China: a note. Journal of Chinese Economic and Business Studies, 10(3), 267–273. https://doi.org/10.1080/14765284.2012.703541
Thalib, D. (2016). Intermediasi, Struktur Modal, Efisiensi, Permodalan Dan Risiko Terhadap Profitabilitas Bank. Jurnal Keuangan Dan Perbankan, 20(1), 116–126. https://doi.org/10.26905/jkdp.v20i1.155
Tin, L., Ahmad, R., & Shaharudin, S. (2011). Determinants of Bank Profits and Net Interest Margins in East Asia and Latin America. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1912319
Watiningsih, F. (2018). Pengaruh profitabilitas, ukuran perusahaan, tangibility, dan pertumbuhan terhadap struktur modal pada perbankan yang terdaftar di BEI periode 2008-2016. Jurnal Sekuritas, 1(4), 92–105. https://doi.org/10.32493/skt.v1i4.1382
Refbacks
- The Impact of Bank-Specific and Macro Economic Factors on Profitability in Small Banks
- The Impact of Bank-Specific and Macro Economic Factors on Profitability in Small Banks
Jurnal Dinamika Akuntansi is licensed under a Creative Commons Attribution 4.0 International License