Financial Performance and Factors Influencing Its Banking Companies in Indonesia Stock Exchange

Abstract

This study is about the influence of corporate governance on corporate performance in Indonesia. Data from 20 banking companies in Indonesia Stock Exchange for the period of five years 2011-2016 conducted a panel data analysis with modeling by conducting Chow and Hausman tests. The results show that the influence of corporate governance (institutional share ownership, independent comers, audit committee and board of directors), non performing loan and loan to deposit ratio have an effect on company performance measure. in particular, the findings indicate that non performing loans have a negative and significant effect on return on assets, and audit committee variables have a positive and significant impact on return on equity, whereas while non performing loan and loan to deposit ratio have the negative and significant impact on return on equity. Other variables have no significant effect on return on assets and return on equity. KEY WORDSBanking companies, good corporate governance, non performing loan, loan to deposit ratio, return on assets, return on equity.

The Relationship Between Net Interest Margin and Return on Asset: Empirical Study of Conventional Banking in Indonesia

“…Results of this study support the findings of Puspitasari et al (2019) which did not find any effect of NPL on ROA. However, Căpraru & Ihnatov (2014), Silaban (2017), andYolanda, &Sumarni (2018) found that NPL have a negative effect to ROA.…”

“…While, Raharjo et al (2014), Sidabalok (2013), and Moussa & Majouj (2016) found that NPL have not effect on NIM. Related with ROA, Yolanda & Sumarni (2018) found that NPL has a negative effect on ROA. However, Puspitasari et al, (2019) proved the opposite where NPL had not effect on ROA in Indonesian commercial banks.…”