Effect of Capital Structure on Banks Performance: A Profit Efficiency Approach Islamic and Conventional Banks Case in Indonesia

Al-Farisi, Ade Salman; Hendrawan, Riko

doi:10.2139/ssrn.1895211

Cited by 14 publications

(9 citation statements)

References 14 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Thus, if there is an increase in securities owned, the profit of the banking company will also increase. This is consistent with the findings of Al-Farisi and Hendrawan (2012).…”

Section: Effect Of Input Output and Environmental Variables On Banking Profitsupporting

confidence: 93%

“…This means that labor costs are directly proportional to profit growth, while total assets are inversely proportional to banking profits. This is consistent with the findings of Al-Farisi and Hendrawan (2012).…”

Section: Effect Of Input Output and Environmental Variables On Banking Profitsupporting

confidence: 93%

“…This means that if there is an increase in credit disbursed, the profit of the banking company will also increase. This is consistent with the findings of Al-Farisi and Hendrawan (2012). Further, the Y3 output variable have a significantly positive effect on the Tratio at 1.91 (significant at α = 1%).…”

Section: Effect Of Input Output and Environmental Variables On Banking Profitsupporting

confidence: 90%

See 2 more Smart Citations

Assessing Banking Profit Efficiency Using Stochastic Frontier Analysis

Hendrawan

Nasution

2018

J. Fin. Bank. Review

Self Cite

View full text Add to dashboard Cite

Objective - The banking sector plays an important role in the Indonesian economy. The sustainability of the Indonesian banking sector will depend on the ability of every banking institution to maintain their competitiveness. Banking competitiveness is reflected in the level of efficiency of the banking system itself. Methodology/Technique - The purpose of this research is to assess the efficiency of 21 banks on the IDX between 2008-2017 using Stochastic Frontier Analysis. Findings - The findings of this research show a maximum efficiency score of 0.69 and the bank's average score among the research sample with the input and output allocation which can generate profits is 0.69 - 0.43 = 0.26. Overall, the banking sector in the Indonesian capital market between 2008 - 2017 recorded an efficiency score of 0.43. With this score, the banking system in the Indonesian capital market is still considered to be inefficient (0.43 <0.5). The results also demonstrate that the distribution of efficiency scores polarized in two poles. In the first pole, there were 11 banks that had a relatively good efficiency score (> = 0,5) and in the second pole, there were 10 banks with low efficiency scores (less than 0.5). Novelty – From the results, it can be concluded that several output variables, such as total loans (Y1) and securities (Y3), and input variables such as prices of labor (W2) and inflation (Z), have a significant effect on banking profits. Meanwhile, input variables such as the price of fund variables or the total funds (W1) and the price of physical capital were reflected in the depreciation of fixed assets (W3), and the output variables of income and interest (Y2) had an insignificant effect on bank profits. Type of Paper - Keywords: Bank Efficiency; IDX, Stochastic Frontier Analysis, Indonesia. JEL Classification: G10, G14, G19.

show abstract

“…Thus, if there is an increase in securities owned, the profit of the banking company will also increase. This is consistent with the findings of Al-Farisi and Hendrawan (2012).…”

Section: Effect Of Input Output and Environmental Variables On Banking Profitsupporting

confidence: 93%

Section: Effect Of Input Output and Environmental Variables On Banking Profitsupporting

confidence: 93%

Section: Effect Of Input Output and Environmental Variables On Banking Profitsupporting

confidence: 90%

See 1 more Smart Citation

Assessing Banking Profit Efficiency Using Stochastic Frontier Analysis

Hendrawan

Nasution

2018

J. Fin. Bank. Review

Self Cite

View full text Add to dashboard Cite

show abstract

“…Al-Farisi and Hendrawan [19] investigates the effect of capital structure on profit efficiency of Islamic bank and commercial bank. Data collected from 102 conventional and Islamic banks and use the unit root test for analysis.…”

Section: Empirical Evidencesmentioning

confidence: 99%

Effect of Capital Structure on Financial Performance of Listed Banks in Nigeria

Adeoye

Olojede

2019

AJEBA

View full text Add to dashboard Cite

Corporate entities all over the world are faced with the problem of determining appropriate finance that will boost the value of the entity and maximize the wealth of shareholders. However, for overall wealth of shareholders to be met and consistent increase in value of Banks to be achievable, capital either debt in form of customers deposit or equity capital raised from investors is inevitable. This study therefore examined the effect of capital structure on the performance of some selected banks in Nigeria. The objectives were to examine the relationship that exists between capital structure and financial performance and to investigate the effect of capital structure on the financial performance of quoted deposit money banks in Nigeria. To achieve these, a cross sectional time series secondary data covering the period of seven years (2012-2018) was extracted from the audited financial statement of ten (10) banks listed on the floor of stock exchange. The descriptive statistics, Pearson moment correlation and multiple linear regressions were used. The correlation results showed that capital structure is negatively correlated with financial performance (ROA and ROE). Result from panel regression revealed that debt to equity though significant, impacted negatively on return on assets and return on equity ( = −0.1266, < .01; = −5.3571, > .01) , asset tangibility significantly impacted return on asset but 2 insignificantly impacted return on shareholder's equity ( = −0.0235, > .05; = −0.3527, > .10) and also Age have a significant impact on return on asset and insignificant effect on return on equity ( = −0.0141, < .01; = −0.1497, > .10). This study therefore concluded that capital structure have a negative effect on the financial performance of deposit money banks in Nigeria and recommended that appropriate proportion of capital should be tailored towards viable investment opportunities for maximum return of shareholders wealth and increase in value of the firm. More so, while finance manager is alert to the movement in the stock market, banks should take precautionary measures for mitigating credit risk associated with lending and borrowing.

show abstract

“…(2006), Torres and Bachiller (2011), Masson, Jain, Ganesh and George (2016), Hendrawan and Nugroho (2018) measured telecom companies' efficiency in Turkey, Taiwan, Asia-Pacific, Europe, India, and Indonesia. Al-Farisi and Hendrawan (2010Hendrawan ( , 2011 used the DFA approach to measure the efficiency of the banking industry in Indonesia. Gaster and Hundekar (2017) on the other hand studied financial performance of telecom operators in India.…”

mentioning

confidence: 99%

How Impactful is Telecom Efficiency to Company Stock Value?

Hendrawan

Nugroho

Permana

2019

J. Fin. Bank. Review

Self Cite

View full text Add to dashboard Cite

Objective -The telecom industry is one of the optimistic industries that is still growing. In South East Asia, between 2008-2017, the number of subscribers increased 10.07% annually, and revenue for the industry grew 6.08% annually. However, Net Profit Margin, EBITDA, and EBIT value during the same period declined at the time revenue amount was increasing. One of the visible health factors and part of the valuation factor is stock value. Hence the research question of this study is: What is the impact and significance of telecom operators' efficiency to stock value? Methodology/Technique -In this study, efficiency will be measured and analyzed using Stochastic Frontier Approach (SFA) method. By using same method, the impact of efficiency to stock value will be measured, as well as the significance level. Findings -The results of this research show that from 14 telecom operators observed, TLKM (Indonesia) obtained the highest efficiency score (0.984) whereas StarHub (Malaysia) had the lowest efficiency score (0.405). TLKM (Indonesia) and AIS (Thailand) had a similar efficiency score given the fact that the behaviour of the subscribers is similar and they have the same country characteristic. Novelty -All of the input and output variables have a positive impact on the efficiency parameter except Total Asset which has negative impact on the efficiency score. By using further analysis of the t-Ratio between the variables and efficiency, it can be seen that stock value is impacted by the efficiency parameters but this impact is not significant (t-Ratio 1.35).

show abstract

Effect of Capital Structure on Banks Performance: A Profit Efficiency Approach Islamic and Conventional Banks Case in Indonesia

Cited by 14 publications

References 14 publications

Assessing Banking Profit Efficiency Using Stochastic Frontier Analysis

Assessing Banking Profit Efficiency Using Stochastic Frontier Analysis

Effect of Capital Structure on Financial Performance of Listed Banks in Nigeria

How Impactful is Telecom Efficiency to Company Stock Value?

Contact Info

Product

Resources

About