EconPapers    
Economics at your fingertips  
 

Anomalies of Banking Intermediation and Profit Growth (Study on the 10 Largest Banks in Indonesia)

Herry Achmad Buchory ()
Additional contact information
Herry Achmad Buchory: Sekolah Tinggi Ilmu Ekonomi Ekuitas, Jln. PHH. Mustopa No. 31, 40124, Bandung, Indonesia Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:

GATR Journals from Global Academy of Training and Research (GATR) Enterprise

Abstract: Objective - One of the bank's main goals is to obtain profit mainly from the intermediation process. The implementation of the Indonesian banking intermediary function in the year 2017 is not optimal, as indicated by credit growth in the year 2017 which only reached 8,35%. This phenomenon also occurs in the 10 largest banks in Indonesia. In 2017 the intermediation function has decreased but profits have increased. The aim of this study is to analyze the influence of banking intermediation on profit growth and whether credit quality and operational efficiency affect profit growth. An indicator of banking intermediation is a loan to deposits ratio (LDR), credit quality with non-performing loans (NPLs), the operating efficiency with the ratio of operating expense to operating income (OEOI) and profit growth is measured by the amount of profit. Methodology – Descriptive and verification methods will be used in this study, with data from the 10 largest banks financial statements in Indonesia for the period 2016-2017 while data analysis uses multiple linear regression. Findings – The findings of this study show that partially LDR has a positive effect although the effect is not significant on Profit; NPLs have a negative effect on Profit and the effect is significant; OEOI has a negative effect even though the effect is not significant on Profit; Simultaneously, the variable LDR, NPLs, OEOI have a significant effect on profit. Novelty – Compared to previous studies, bank profit growth is not only influenced by banking intermediation, but if banks can maintain credit quality and improve operational efficiency, bank profits will grow Type of Paper - Empirical.

Keywords: loan to deposit ratio; non-performing loans; the ratio of operating expenses to operating income; profit growth. (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Pages: 9
Date: 2020-06-30
New Economics Papers: this item is included in nep-ban and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published in Journal of Finance and Banking Review, Volume 5, Issue 1

Downloads: (external link)
http://gatrenterprise.com/GATRJournals/JFBR/pdf_fi ... Achmad%20Buchory.pdf (application/pdf)
http://gatrenterprise.com/GATRJournals/online_submission.html

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:gtr:gatrjs:jfbr168

Access Statistics for this paper

More papers in GATR Journals from Global Academy of Training and Research (GATR) Enterprise
Bibliographic data for series maintained by Prof. Dr. Abd Rahim Mohamad ().

 
Page updated 2021-06-10
Handle: RePEc:gtr:gatrjs:jfbr168