Financial Stability of Indonesian Small and Medium Financing Bank

Saiful Saiful (), Isma Coryanata, Deasy Emalia, Sriwidharmanely Sriwidharmanely and Fenny Marietza
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Saiful Saiful: Bengkulu University, Faculty of Business and Economics
Isma Coryanata: Bengkulu University, Faculty of Business and Economics
Deasy Emalia: Bengkulu University, Faculty of Business and Economics
Sriwidharmanely Sriwidharmanely: Bengkulu University, Faculty of Business and Economics
Fenny Marietza: Bengkulu University, Faculty of Business and Economics

A chapter in Proceedings of the 12th International Conference on Business, Accounting, Finance and Economics (BAFE 2024), 2025, pp 578-587 from Springer

Abstract: Abstract This research aims to investigate the determinant factors of the financial stability of small and medium financing banks (SMFB) in Indonesia. The sample of this study was 100 SMFBs in Indonesia from all provinces selected using a multistage random sampling approach. The findings of the research suggested that on average the financial stability of SMFBs is relatively good with quite high variation between banks with high and low financial stability. This indicates the possibility that many SMFBs in Indonesia will experience financial difficulties or even go bankrupt. In the context of factors that influence the financial stability of SMFBs in Indonesia, this study found that operating efficiency, capital adequacy ratio, and liquidity have a positive effect on the financial stability of SMFBs. Additionally, this study discovered that non-performing loans negatively impact the financial stability of SMFBs. The findings imply that financial stability of Indonesian SMFB can be maintained based on banks’ ability to increase operational efficiency, capital adequacy ratio, liquidity and to reduce its NPL.

Keywords: financial stability; small & medium Bank; operation efficiency (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-666-6_35

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DOI: 10.2991/978-94-6463-666-6_35

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