The Impact of the Capital Adequacy Ratio, Non-Performing Loan Against to Return on Equity (Case Study Private Bank in Indonesia)

Sebayang, Pirmanta

doi:10.1051/shsconf/20207601035

Cited by 15 publications

(11 citation statements)

References 5 publications

(5 reference statements)

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“…In regard to return on equity (ROE), we found a strong negative impact on the NPL ratio (NPLR). However, the study of Sebayang ( 2020 ) found that an increase in the non-performing loans (NPLs) can have a positive effect and increase return on equity (ROE); in the study of Nursiana ( 2017 ), the effect of non-performing loans to profitability of banks in Indonesia found that NPL ratio has significant effect to ROE, while the ROE showed no significant relationship with green financing of the banks in the study of Julia and Kassim ( 2016 ). Also, in this study, we found that the impact of inefficiency ratio (INEF) is significant on the NPL ratio (NPLR), and in the study of Vatansever and Hepsen ( 2013 ), they found that inefficiency ratio of all banks affect negatively on the unemployment rate, ROE, and NPL ratio, while the NPL ratio positively affected by the capital adequacy.…”

Section: Discussionmentioning

confidence: 99%

The impact of green lending on credit risk: evidence from UAE’s banks

Al-Qudah¹,

Hamdan

Al-Okaily

et al. 2022

Environ Sci Pollut Res

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This study investigates the impact of UAE’s Green Credit Policy on the non-performing loan. One of the main pillars in the UAE green agenda 2015–2030 is the green finance that has been growing in high acceleration in the Gulf Cooperation Council (GCC) countries and the whole world. Consequently, the main objective of this study is to investigate in the financial risks that associated with green lending and whether an increasing in green lending will decrease the non-performing loans ratio (NPLR) of UAE banks, based on the period 2015–2020 dataset of 23 UAE’s banks. To achieve this objective, we have used a regression technique that includes a two-stage least square regression analysis and random-effect regression analysis to test if the increase in green credit ratio can reduce the NPL ratio in a sample of UAE’s banks. The current study can be considered the first empirical attempt that conducted on the banking sector in UAE, to discover the variables that might have a direct impact on the NPL ratio. The results reveal that the ratio of green loans has a negative impact on the NPL ratio, as much as the return of equity, while the quality of credit, inefficiency, and the bank size have a positive impact on NPL ratio. But as was not as expected, we found that the impact of solvency ratio has a negative significant on the NPL ratio. Finally, the current study introduces a new value to the current literature about the impact of green lending policies and provides a new perspective which supports the financial sustainability in UAE.

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Section: Discussionmentioning

confidence: 99%

The impact of green lending on credit risk: evidence from UAE’s banks

Al-Qudah¹,

Hamdan

Al-Okaily

et al. 2022

Environ Sci Pollut Res

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“…Behind this situation, damage to the banking system occurs because lending has an effect on the financial performance of the banking system itself (Harun et al, 2014;Wahyudi et al, 2019). High non-performing loans affect capital (Sebayang, 2020), which has an impact on decreasing the soundness of banks in the long term (Huljak et al, 2022).…”

Section: Introductionmentioning

confidence: 99%

Bank Credit in Financial Cycle during COVID-19 Pandemic: Dilemma from Indonesia

Basmar¹,

Campbell

Basmar³

2022

Shirkah

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Bank credit is crucial to boost economic growth and preserve financial stability during the COVID-19 pandemic. However, a previous study has yet to establish the state of bank credit in the financial cycle during the COVID-19 pandemic in Indonesia. This study discovered different categories of banking credit dilemmas during the COVID-19 pandemic in Indonesia, including mild category, moderate category, heavy category, and very heavy category. During the global pandemic from 2019 to July 2021. This study used monthly development of the Ed Waves Index model through the Financial Report of Bank Indonesia. The pressure dilemma includes moderate category (1 time), mild category (1 time), heavy category (2 times), and very heavy category (1 time) which indicate that there is serious pressure on financial stability and economic growth in Indonesia during the outbreak. This research makes an important contribution to the banking sector and Bank Indonesia in controlling the bank's soundness through distribution channels of credit and a stable financial cycle as well as economic growth in Indonesia during the COVID-19 pandemic.

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“…The value of the NPL variable is 0.9466 and 0.1362, both> 0.05, which means that NPL has no significant effect on bank financial performance, Ha is rejected. This is not following research conducted by [15], which states that NPL has a significant negative effect on bank financial performance, but a following study conducted in Bangladesh [25] which shows the results of NPL has a negative but insignificant impact on ROA, as well as the results of research conducted by [22] which states that NPL has a positive but insignificant effect on ROE. Another [21] study shows that NPL does not significantly affect ROE and ROA.…”

Section: H 4 : There Is An Effect Of Non-performing Loan (Npl) On Ban...mentioning

confidence: 79%

The Effect of Corporate Social Responsibility, Credit Risk, and Leverage on the Financial Performance of Commercial Banks in Indonesia

Mahisi

Saputra

Leon

et al. 2023

IJSMS

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This study examines the relationship between corporate social responsibility, credit risk, and leverage with the performance of commercial banks in Indonesia. Hypothesis testing is conducted to explore the influence of independent variables, namely Corporate Social Responsibility (CSR), Credit Risk described by Capital Adequation Ratio (CAR), Loan To Deposit Ratio (LDR), and Non-Performing Loan (NPL), and Leverage defined by Debt to Asset Ratio (DR), on the dependent variable, namely Financial Performance measured using ROA and ROE. In contrast, Bank Size is used as a control variable. The sample of this study includes 33 conventional commercial banks listed on the Indonesia Stock Exchange (IDX), using secondary data obtained from financial reports and bank sustainability reports for six years (2016-2021). With the multiple regression method on panel data using the Eviews 12 tool, the results of this study indicate that the CSR variable has a significant negative effect on ROE and has no significant impact on ROA, CAR has no significant effect on ROE or ROA, LDR has a significant negative impact on ROE and ROA, NPL has no significant effect on ROE or ROA, and DR has a significant positive impact on ROE but has no significant effect on ROA. This study can provide empirical evidence to managers, investors, and regulators to better understand CSR, leverage, and bank risk in formulating better policies and careful decision-making.

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The Impact of the Capital Adequacy Ratio, Non-Performing Loan Against to Return on Equity (Case Study Private Bank in Indonesia)

Cited by 15 publications

References 5 publications

The impact of green lending on credit risk: evidence from UAE’s banks

The impact of green lending on credit risk: evidence from UAE’s banks

Bank Credit in Financial Cycle during COVID-19 Pandemic: Dilemma from Indonesia

The Effect of Corporate Social Responsibility, Credit Risk, and Leverage on the Financial Performance of Commercial Banks in Indonesia

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