Bank Specific Factors that Affect Credit Risk
Keywords:
Credit Risk, Efficiency, Leverage, Liquidity, Ownership ConcentrationAbstract
Indonesian’s banking has taken steps to improve financial performance by managing credit risk and supporting economic recovery in 2023, efforts carried out by banks include providing credit and acting as intermediaries with very vulnerable credit risk challenges.This research has purpose to find out which bank spesific internal factor can significantly affect the credit risk in a bank. The independent variables in this study are efficiency, leverage, liquidity, ROA, ROE, solvency, banking spread, banking size, and ownership concentration. While the dependent variable is credit risk using NPL and Z-Score. The study used panel data regression models to test the data collected from 98 banks registered with OJK over three years (2020-2022). The results stated that leverage, ROA, ROE, solvency, bank size, have a positive influence on ZScore, while efficiency, liquidity, and bank spread have no influence on Zscore. The results also show that efficiency and ROA have a positive influence on NPL. Liquidity, ROE, solvency, bank spread, bank size, and ownership concentration variables have an influence on NPLs and leverage has no influence on NPL. Additionally, investors should be able to use this research's insights about company performance to get a general understanding of the credit risk associated with linked companies, which they can use to inform their investment decisions.References
Anantiputeri, D. D., Azizah, W. W., & Leon, F. M. (2023). The Influence of Internal and Macroeconomic Factors on Credit Risk of Conventional Banks Listed on the IDX. International Journal of Science and Management Studies (IJSMS), 79–94. https://doi.org/10.51386/25815946/ijsms-v6i3p108
Antony, T. M., & Suresh, G. (2023). DETERMINANTS OF CREDIT RISK: EMPIRICAL EVIDENCE FROM INDIAN COMMERCIAL BANKS. Banks and Bank Systems, 18(2), 88–100. https://doi.org/10.21511/bbs.18(2).2023.08
Ayunku, P. E., & Uzochukwu, A. (2020). Agency Cost and Credit Risk Management: Empirical Evidence from Listed Commercial Banks in Nigeria. Asian Journal of Economics, Business and Accounting, 1–17. https://doi.org/10.9734/ajeba/2020/v17i230254
Farag, K., Kassem, T., & Ramzy, Y. (2023). The Crucial Macroeconomic and Microeconomic Determinants of Retail and Corporate Credit Risks. Journal of Accounting Finance and Auditing Studies (JAFAS). https://doi.org/10.32602/jafas.2023.028
Goswami, A. (2022). Does credit risk persist in the Indian banking industry? Recent evidence. Asian Journal of Economics and Banking, 6(2), 178–197. https://doi.org/10.1108/ajeb-01-2021-0006
Hasnaoui, J. A., & Hasnaoui, A. (2022). How does human capital efficiency impact credit risk?: the case of commercial banks in the GCC. Journal of Risk Finance, 23(5), 639–651. https://doi.org/10.1108/JRF-04-2022-0083
Hunjra, A. I., Hanif, M., Mehmood, R., & Nguyen, L. V. (2020). Diversification, Corporate Governance , Regulation and Bank Risk-Taking. Journal of Financial Reporting and Accounting Vol. 19 No. 1, 2021 Pp. 92-108. https://doi.org/10.1108/JFRA-03-2020-0071
Khan, N., Ramzan, M., Kousar, T., & Shafiq, M. A. (2023). Impact of Bank Specific Factors on Credit Risk: Evidence from Islamic and Conventional Banks of Pakistan. Pakistan Journal of Humanities and Social Sciences, 11(1), 580–592. https://doi.org/10.52131/pjhss.2023.1101.0375
Morina, D. (2020). Determinants of Credit Risk in Commercial Banks of Kosovo. In International Journal of Economics and Business Administration: Vol. VIII (Issue 2).
Naili, M., & Lahrichi, Y. (2022). Banks’ credit risk, systematic determinants and specific factors: recent evidence from emerging markets. Heliyon, 8(2). https://doi.org/10.1016/j.heliyon.2022.e08960
Rachman, M. A. (2023). The Monetary and Macroeconomic Conditions on Interest Rate Spread: Empirical evidence from Indonesia. JEJAK, 16(1). https://doi.org/10.15294/jejak.v16i1.44195
Sadaa, A. M., Ganesan, Y., Yet, C. E., Alkhazaleh, Q., Alnoor, A., & aldegis, A. M. (2023). Corporate governance as antecedents and financial distress as a consequence of credit risk. Evidence from Iraqi banks. Journal of Open Innovation: Technology, Market, and Complexity, 9(2). https://doi.org/10.1016/j.joitmc.2023.100051
Stefano, J., & Dewi, S. P. (2022). Stefano and Dewi: Determinants of Non-Performing … Determinants of Non-Performing Loans: Banking Sector Listed in Indonesia Stock Exchange.
Yusuf, N. H. M, Mohamad Shamsudin, M. S., Mohd Abdoh, W. M. Y., Badri Shah, N. S., & Shekh Zain, R. (2021). Determinants of Credit Risk: Evidence From Commercial Banks in Malaysia. Jurnal Intelek, 16(1), 134–143. https://doi.org/10.24191/ji.v16i1.373
