The Impact Of Risk Management And Bank Size On Profitability Of Commercial Banking In Indonesia

DOI

10.2991/ebic-17.2018.7How to use a DOI?

Keywords

Bank, CAR, NPL, Size, ROA

Abstract

The growth of credit in Indonesian Banking industry tends to be slower in period 2011 until 2016 whereas the credit growth only 7.87% compare to 10.4% in 2016. But based on the important role of the banking sector for economic development, the regulator should manage the risk of the credit in order to create a healthy and strong banking industry. According to Bank Indonesia regulation, one of the banking risks is the liquidity risk which BI stipulated two things in managing the bank's risk that is CAR and NPL. Then this research aim to investigate whether CAR, NPL and Size will give an effect to the profitability of the bank. With the sample of 30 commercial banks that quoted from Indonesian Stock Exchange period 2011-2015 by applying panel data regression analysis, the research result showed that there is a positive and significant effect of CAR toward bank's ROA. NPL had a negative but insignificant effect toward ROA. Firm size had a positive and significant effect toward ROA. It is more profitable to invest in a bigger bank with a high CAR and less NPL. It's implied that it will be more profitable to invest in a bigger bank with a high CAR and less NPL. Even though, it is important to monitor their CAR and NPL level.

Copyright

© 2018, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Nisrul Irawati
AU  - Azhar Maksum
PY  - 2018/01
DA  - 2018/01
TI  - The Impact Of Risk Management And Bank Size On Profitability Of Commercial Banking In Indonesia
BT  - Proceedings of the 1st Economics and Business International Conference 2017 (EBIC 2017)
PB  - Atlantis Press
SP  - 38
EP  - 41
SN  - 2352-5428
UR  - https://doi.org/10.2991/ebic-17.2018.7
DO  - 10.2991/ebic-17.2018.7
ID  - Irawati2018/01
ER  -