Modeling the profitability of commercial banks in Indonesia

Tri Wulandari (), Lukytawati Anggraeni () and Trias Andati ()

Economic Journal of Emerging Markets, 2016, vol. 8, issue 2, 109-119

Abstract: This study examines the effect of lending on Micro, Small and Medium Enterprises (MSMEs) on the profitability of commercial banks in Indonesia. The profitability is measured as Return-on-Assets (ROA) and Return-on-Equity (ROE). It covers the period of 2011 to 2014 using a panel data regression. It finds that MSME loans have a positive impact on ROE. Other internal factors that significantly influence the profitability of banks are MSME’s NPL (non performing loan), the operational efficiency ratio (OER) and loan-to-deposit ratio (LDR), while external factors that significantly influence the profitability of banks are inflation, Gross Domestic Product (GDP) growth and the Bank Indonesia (BI) rate.

Keywords: loan; return on asset; return on equity; commercial bank (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journal.uii.ac.id/JEP/article/view/6005/5763 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uii:journl:v:8:y:2016:i:2:p:109-119:id:6005

Access Statistics for this article

Economic Journal of Emerging Markets is currently edited by Ana Yuliani

More articles in Economic Journal of Emerging Markets from Universitas Islam Indonesia
Bibliographic data for series maintained by Ana Yuliani ().