The Influence of Non-Performing Loan and Loan to Deposit Ratio on the Level of Conventional Bank Health in Indonesia

Authors

  • Fajri Hakim PT. Angkasa Pura I (Persero) Branch Balikpapan

Keywords:

Non-performing loans, loans to deposit ratio, good corporate governance, capital adequacy ratio, bank health

Abstract

This study aims to examine the factors that influence the health of conventional banks in Indonesia. Specifically, this study examined the effect both partially and simultaneously of ratio of non-performing loans (NPL), the ratio of loans to deposits (LDR), good corporate governance (GCG), capital adequacy ratio (CAR), net interest margin (NIM), and operating costs to operating income (OEOI) to the health of conventional banks listed on the Indonesia Stock Exchange. Then, testing is carried out to analyze the factors that have the most dominant influence on the dependent variable of the health bank. This study uses secondary data which includes 20 conventional banks listed on the Indonesia Stock Exchange during the period 2008-2012 using purposive sampling. Data were analyzed using logistic regression to test the effect of independent variables on the dependent variable. The feasibility test of the model and the test of the coefficient of determination are carried out to test the hypothesis with a confidence level of 5%. The results of the study indicate that two independent variables of operating costs to operating income, and good corporate governance have a significant negative effect on the health of the bank. On the other hand, bad credit, the ratio of loans to deposite, net interest margin, and capital adequacy ratio do not significantly influence the health of the bank. Finally, the evidence shows that the predictive power of the logistic regression model is 50.1%. Some implications are discussed at the end of the paper.

References

Almilia, L. S., & Herdiningtyas, W, (2005). Analisis Rasio CAMEL terhadap Prediksi Kondisi Bermasalah pada Lembaga Perbankan Perioda 2000-2002. Jurnal Akuntansi dan Keuangan 7(2).

Ayuningrum, A. P., & Widyarti, E. T. (2011). Analisis Pengaruh CAR, NPL, BOPO, NIM dan LDR Terhadap ROA (Studi pada Bank Umum Go Public yang Listed pada Bursa Efek Indonesia tahun 2005-2009) (Doctoral dissertation, Universitas Diponegoro).

Bank Indonesia. (2004). Sistem Penilaian Tingkat Kesehatan Bank Umum. Jakarta: Bank Indonesia.

Borio, C. E., & Drehmann, M. (2009). Assessing the risk of banking crises–revisited. BIS Quarterly Review, March 11 2009. Available at SSRN: https://ssrn.com/abstract=1513316.

Budisantoso, T., & Triandaru, S. (2006). Bank dan Lembaga Keuangan Lain. Jakarta: Salemba Empat.

Cheung, Y. L., Thomas Connelly, J., Limpaphayom, P., & Zhou, L. (2007). Do investors really value corporate governance? Evidence from the Hong Kong market. Journal of International Financial Management & Accounting, 18(2), 86-122.

Claessens, S., & Laeven, L. (2003). What drives bank competition? Some international evidence. The World Bank.

Cormier, D., Ledoux, M. J., Magnan, M., & Aerts, W. (2010). Corporate governance and information asymmetry between managers and investors. Corporate Governance: The international journal of business in society, 10(5), 574-589.

Dendawijaya, L. (2001). Manajemen Perbankan. Jakarta: Ghalia Indonesia.

Hoshi, T., Kashyap, A., & Scharfstein, D. (1990). Bank monitoring and investment: Evidence from the changing structure of Japanese corporate banking relationships. In Asymmetric information, corporate finance, and investment (pp. 105-126). University of Chicago Press.

Kasmir. (2008). Bank & Lembaga Keuangan Lainnya. Jakarta: PT. Raja Grafindo Persada.

Love, I., & Klapper, L. F. (2002). Corporate governance, investor protection, and performance in emerging markets. The World Bank.

Macey, J., & O’hara, M. (2003).The Corporate Governance of Banks. Economic Policy Review 9 (1). Available at SSRN: https://ssrn.com/abstract=795548.

Mashitoh, H. (2013, October). The Influence of Corporate Governance Implementation toward Bank Performance (Empirical Study on Banks Listed in Indonesia Stock Exchange). In International Conference on Law, Business and Governance (IConLBG) (Vol. 1).

Siamat, D. (2005). Manajemen Lembaga Keuangan: Kebijakan Moneter dan Perbankan. Jakarta: FE UI.

Sugiarti, W. (2012). Analisis kinerja keuangan dan prediksi tingkat Kesehatan bank dengan menggunakan metode Camel pada bank umum yang tercatat di bursa Efek Indonesia. Jurnal Akuntansi Fakultas Ekonomi Universitas Gunadarma, 1-19.

Taswan. (2010). Manajemen Perbankan (Konsep, Teknik, dan Aplikasi). Yogyakarta: UPP STIE YKPN.

Downloads

Published

2017-12-30

Issue

Section

Articles