Proceedings of the International Conference on Sustainable Collaboration in Business, Technology, Information, and Innovation (SCBTII 2024)

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Determination of Bank Health Through Profitability as an Intervening Variable in Conventional Banks

Authors
Umi Subadriyah1, *, Eleonora Sofilsa1, Lavlimatria Esya1
1Faculty of Economics and Business, University of Trisakti, Jakarta, Indonesia
*Corresponding author. Email: ummisubadriyah@gmail.com
Corresponding Author
Umi Subadriyah
Available Online 19 November 2024.
DOI
10.2991/978-94-6463-558-4_9How to use a DOI?
Keywords
Credit Risk; Liquidity Risk; Profitability; Macro Variables and Bank Health
Abstract

The aim of this study is to test the determination of bank health through profitability as an intervening variable in conventional banks. The study employed a quantitative approach, utilizing a structural equation model (SEM) analysis. The data is 105 conventional banks in Indonesia from 2018 to 2023. The results indicate that there is a direct effect of macroeconomic variables, liquidity risk and credit risk on profitability. However, the indirect effects of these variables on bank health do not exist. In contrast, the indirect effects of macroeconomic variables and liquidity on credit risk and profitability are significant. The findings of this research indicate that macroeconomic indicators, liquidity risk, credit risk, and profitability are the primary factors influencing the health of banks. This study concludes that only credit risk and profitability have an effect on bank health while liquidity and macroeconomic risks, and credit risk have an effect on increasing profitability. Therefore, banks must meet capital adequacy (CAR) to overcome the increasingly high credit risk, banks provide a certain amount of funds to bear the burden of losses in the event of a default.

Copyright
© 2024 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the International Conference on Sustainable Collaboration in Business, Technology, Information, and Innovation (SCBTII 2024)
Series
Advances in Economics, Business and Management Research
Publication Date
19 November 2024
ISBN
978-94-6463-558-4
ISSN
2352-5428
DOI
10.2991/978-94-6463-558-4_9How to use a DOI?
Copyright
© 2024 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Umi Subadriyah
AU  - Eleonora Sofilsa
AU  - Lavlimatria Esya
PY  - 2024
DA  - 2024/11/19
TI  - Determination of Bank Health Through Profitability as an Intervening Variable in Conventional Banks
BT  - Proceedings of the International Conference on Sustainable Collaboration in Business, Technology, Information, and Innovation (SCBTII 2024)
PB  - Atlantis Press
SP  - 149
EP  - 166
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-558-4_9
DO  - 10.2991/978-94-6463-558-4_9
ID  - Subadriyah2024
ER  -