Main Article Content
Abstract
This research aims to analyze the factors affecting bank stability in Indonesia. The data used in this research is secondary data on the banking sector sourced from the financial reports of companies listed on the Indonesia Stock Exchange (IDX) during the period 2019-2023. The research sample was selected using the purposive sampling method, resulting in 35 companies that are suitable for the research. The data analysis used for hypothesis testing is panel data regression analysis using the Eviews 9 program. The results of the study show that bank size and the economic cycle affect bank stability. This indicates that the larger the bank size, the more stable the bank can be in obtaining income. For the economic cycle variable, if GDP growth contributes to bank stability, it indicates management’s ability to manage risk effectively. Strict supervision and effective risk management are key to the stability of the banking system. Various factors, both internal and external, such as risk management and business strategy, significantly influence bank stability. And external (like economic cycles and government policies). By effectively managing assets and adapting to economic conditions, banks can enhance their stability and contribute to the overall stability of the financial system.
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References
- Adem, M. (2022). Impact of Diversification on Bank Stability: Evidence from Emerging and Developing Countries. Discrete Dynamics in Nature and Society, 2022(1). https://doi.org/10.1155/2022/7200725
- Akhter, W., Asif, R., & Pappas, V. (2023). Diversification and Financial Stability: Evidence from Dual Banking Economies. https://doi.org/10.2139/ssrn.4359924
- Alaeddin, O., Khattak, A., & Abojeib, M. (2019). Evaluating Stability In Dual Banking System: Comparison Between Conventional And Islamic Banks In Malaysia. Humanities & Social Sciences Reviews, 7(2), 510–518. https://doi.org/10.18510/hssr.2019.7260
- Atoi, Ngozi, V. (2019). Non-performing Loan and Its Effects on Banking Stability: Evidence from National and International Licensed Banks in Nigeria. Central Bank of Nigeria Journal of Applied Statistics, 43–74. https://doi.org/10.33429/Cjas.09218.3/6
- Badran, J., & Chamoun, M. (2024). Corporate Governance and Banking Stability in the MENA Region. International Business Research, 17(2), 31. https://doi.org/10.5539/ibr.v17n2p31
- Bakhouche, A., El Ghak, T., & Alshiab, M. (2022). Does Islamicity matter for the stability of Islamic banks in dual banking systems? Heliyon, 8(4), e09245. https://doi.org/10.1016/j.heliyon.2022.e09245
- Bilgin, M. H., Danisman, G. O., Demir, E., & Tarazi, A. (2021). Economic uncertainty and bank stability: Conventional vs. Islamic banking. Journal of Financial Stability, 56, 100911. https://doi.org/10.1016/j.jfs.2021.100911
- Bucher, M., Dietrich, D., & Hauck, A. (2019). Implications of bank regulation for loan supply and bank stability: a dynamic perspective. The European Journal of Finance, 25(16), 1527–1550. https://doi.org/10.1080/1351847X.2019.1614084
- Clichici, D. (2016). Relevanţa Ciclicităţii Pentru Direcţiile De Acţiune Ale Băncilor Centrale. 113–123.
- Dai, M., Huang, S., & Keppo, J. (2019). Opaque bank assets and optimal equity capital. Journal of Economic Dynamics and Control, 100, 369–394. https://doi.org/10.1016/j.jedc.2019.01.005
- Dang, V. D., & Huynh, J. (2024). Bank opacity and stability in an emerging market. International Journal of Emerging Markets, 19(11), 3601–3623. https://doi.org/10.1108/IJOEM-03-2022-0514
- Danisman, G. O., & Demirel, P. (2019). Bank risk-taking in developed countries: The influence of market power and bank regulations. Journal of International Financial Markets, Institutions and Money, 59, 202–217. https://doi.org/10.1016/j.intfin.2018.12.007
- Farkhodjon, K., & Dsc, K. (2024). http://innovatus.es/index.php/ejbsos Current Analysis and Current Issues of Ensuring the Financial Stability of the Banking System in Uzbekistan. EJBSOS European Journal of Business Startups and Open Society |, 4(3), 2795–9228. http://innovatus.es/index.php/ejbsos
- Gana, U., Tijjani, M. S., & Abubakar, S. (2024). Effect of Financial Risk on the Financial Performance of Listed Deposit Money Banks in Nigeria. International Journal of Operational Research in Management, Social Sciences & Education, 10(2), 254–301. https://doi.org/10.48028/iiprds/ijormsse.v10.i2.18
- Ghenimi, A., Chaibi, H., & Omri, M. A. B. (2017). The effects of liquidity risk and credit risk on bank stability: Evidence from the MENA region. Borsa Istanbul Review, 17(4), 238–248. https://doi.org/10.1016/j.bir.2017.05.002
- Gupta, N., & Mahakud, J. (2020). Ownership, bank size, capitalization and bank performance: Evidence from India. Cogent Economics & Finance, 8(1), 1808282. https://doi.org/10.1080/23322039.2020.1808282
- Gupta, N., & Mahakud, J. (2021). Audit committee characteristics and bank performance: evidence from India. Managerial Auditing Journal, 36(6), 813–855. https://doi.org/10.1108/MAJ-04-2020-2622
- Haddad, A., El Ammari, A., & Bouri, A. (2021). Impact of Audit Committee Quality on the Financial Performance of Conventional and Islamic Banks. Journal of Risk and Financial Management, 14(4), 176. https://doi.org/10.3390/jrfm14040176
- Herwald, S., Voigt, S., & Uhde, A. (2024). The impact of market concentration and market power on banking stability – evidence from Europe. The Journal of Risk Finance, 25(3), 510–536. https://doi.org/10.1108/JRF-03-2023-0075
- Ijaz, S., Hassan, A., Tarazi, A., & Fraz, A. (2020). Linking Bank Competition, Financial Stability, And Economic Growth. Journal of Business Economics and Management, 21(1), 200–221. https://doi.org/10.3846/jbem.2020.11761
- Juelsrud, R. E., & Larsen, V. H. (2023). Macroeconomic uncertainty and bank lending. Economics Letters, 225, 111041. https://doi.org/10.1016/j.econlet.2023.111041
- Mabkhot, H., & Al-Wesabi, H. A. H. (2022). Banks’ Financial Stability and Macroeconomic Key Factors in GCC Countries. Sustainability, 14(23), 15999. https://doi.org/10.3390/su142315999
- Marie, M., Kamel, H., & Elbendary, I. (2021). How does internal governance affect banks’ financial stability? Empirical evidence from Egypt. International Journal of Disclosure and Governance, 18(3), 240–255. https://doi.org/10.1057/s41310-021-00110-8
- Muchtar, S., Rusliyana Sari, W., Leon, F. M., Rahayu, C., Sultanali, S., & Pratama, P. (2023). Determinants of Banking performance in Association of Southeast Asian Nations (ASEAN) countries. Jurnal Manajemen Dan Pemasaran Jasa, 16(2), 271–286. https://doi.org/10.25105/jmpj.v16i2.17867
- Muhri, A., Habbe, A. H., & Rura, Y. (2022). Analisis Perbandingan Stabilitas Bank Syariah dan Bank Konvensional. Owner, 7(1), 346–366. https://doi.org/10.33395/owner.v7i1.1360
- Narain, A., Jenkinson, N., Garcia Mora, A., Mascaro, Y., Grolleman, D. J., Kyong Chon, H., Chatain, P.-L., Feyen, E., Gispert, T. A., Adrian, T., & Pazarbasioglu, C. (2020). COVID-19: The Regulatory and Supervisory Implications for the Banking Sector. COVID-19: The Regulatory and Supervisory Implications for the Banking Sector, 1–10. https://doi.org/10.5089/9781513545059.073
- Nguyen, D. T., & Le, T. D. (2022). The interrelationships between bank profitability, bank stability and loan growth in Southeast Asia. Cogent Business & Management, 9(1). https://doi.org/10.1080/23311975.2022.2084977
- Nguyen, Q. K., & Dang, V. C. (2020). Audit committee structure and bank stability in Vietnam. ACRN Journal of Finance and Risk Perspectives, 8(1), 240–255. https://doi.org/10.35944/jofrp.2019.8.1.015
- Obeid, R. (2023). The Impact of Market Power, Credit Risk, and Economic Environment on the Stability of the Arab Banking Sector. International Business Research, 16(10), 1. https://doi.org/10.5539/ibr.v16n10p1
- Octavianus, H., & Fachrudin, K. A. (2022). Income Diversification on Stability in Banking Industry: A Systematic Literature Review. International Journal of Environmental, Sustainability, and Social Science, 3(2), 276–287. https://doi.org/10.38142/ijesss.v3i2.212
- Ozili, P. K. (2018). Munich Personal RePEc Archive Banking Stability Determinants in Africa. International Journal of Managerial Finance, 14(101825).
- Papadopoulos, S. (2019). Competition And Stability In African Banking. The Review of Finance and Banking, 11(2), 43–57. https://doi.org/10.24818/rfb.19.11.02.01
- Phan, D. H. B., Iyke, B. N., Sharma, S. S., & Affandi, Y. (2021). Economic policy uncertainty and financial stability–Is there a relation? Economic Modeling, 94, 1018–1029. https://doi.org/10.1016/j.econmod.2020.02.042
- Raz, A. F., McGowan, D., & Zhao, T. (2022). The dark side of liquidity regulation: Bank opacity and funding liquidity risk. Journal of Financial Intermediation, 52, 100990. https://doi.org/10.1016/j.jfi.2022.100990
- Rizvi, S. A. R., Narayan, P. K., Sakti, A., & Syarifuddin, F. (2020). Role of Islamic banks in Indonesian banking industry: an empirical exploration. Pacific-Basin Finance Journal, 62, 101117. https://doi.org/10.1016/j.pacfin.2019.02.002
- Rupeika-Apoga, R., Zaidi, S. H., Thalassinos, Y. E., & Thalassinos, E. I. (2018). Bank Stability: The Case of Nordic and Non-Nordic Banks in Latvia. International Journal of Economics and Business Administration, VI(Issue 2), 39–55. https://doi.org/10.35808/ijeba/156
- Shim, J. (2019). Loan portfolio diversification, market structure, and bank stability. Journal of Banking & Finance, 104, 103–115. https://doi.org/10.1016/j.jbankfin.2019.04.006
- Tran, D. V., Hassan, M. K., Houston, R., & Rabbani, M. R. (2022). The impact of bank opacity on bank risk‐taking behavior. Journal of Corporate Accounting & Finance, 33(3), 88–101. https://doi.org/10.1002/jcaf.22551
- Tran, S., Nguyen, D., Nguyen, K., Nguyen, C., & Nguyen, L. (2023). Income Diversification, Market Structure and Bank Stability: A Cross-country Analysis. Prague Economic Papers, 32(5), 550–568. https://doi.org/10.18267/j.pep.843
- Vo, D. H., Nguyen, N. T., & Thi-Hong Van, L. (2021). Financial inclusion and stability in the Asian region using bank-level data. Borsa Istanbul Review, 21(1), 36–43. https://doi.org/10.1016/j.bir.2020.06.003
- Yin, H. (2019). Bank globalization and financial stability: International evidence. Research in International Business and Finance, 49, 207–224. https://doi.org/10.1016/j.ribaf.2019.03.009
- Yitayaw, M. K., Mogess, Y. K., Feyisa, H. L., Mamo, W. B., & Abdulahi, S. M. (2023). Determinants of bank stability in Ethiopia: A two-step system GMM estimation. Cogent Economics & Finance, 11(1). https://doi.org/10.1080/23322039.2022.2161771
- Zhang, R., & Wang, S. (2023). Economic Policy Uncertainty and Bank Stability: An Analysis Based on the Intermediary Effects of Opacity. Sustainability, 15(5), 4084. https://doi.org/10.3390/su15054084
References
Adem, M. (2022). Impact of Diversification on Bank Stability: Evidence from Emerging and Developing Countries. Discrete Dynamics in Nature and Society, 2022(1). https://doi.org/10.1155/2022/7200725
Akhter, W., Asif, R., & Pappas, V. (2023). Diversification and Financial Stability: Evidence from Dual Banking Economies. https://doi.org/10.2139/ssrn.4359924
Alaeddin, O., Khattak, A., & Abojeib, M. (2019). Evaluating Stability In Dual Banking System: Comparison Between Conventional And Islamic Banks In Malaysia. Humanities & Social Sciences Reviews, 7(2), 510–518. https://doi.org/10.18510/hssr.2019.7260
Atoi, Ngozi, V. (2019). Non-performing Loan and Its Effects on Banking Stability: Evidence from National and International Licensed Banks in Nigeria. Central Bank of Nigeria Journal of Applied Statistics, 43–74. https://doi.org/10.33429/Cjas.09218.3/6
Badran, J., & Chamoun, M. (2024). Corporate Governance and Banking Stability in the MENA Region. International Business Research, 17(2), 31. https://doi.org/10.5539/ibr.v17n2p31
Bakhouche, A., El Ghak, T., & Alshiab, M. (2022). Does Islamicity matter for the stability of Islamic banks in dual banking systems? Heliyon, 8(4), e09245. https://doi.org/10.1016/j.heliyon.2022.e09245
Bilgin, M. H., Danisman, G. O., Demir, E., & Tarazi, A. (2021). Economic uncertainty and bank stability: Conventional vs. Islamic banking. Journal of Financial Stability, 56, 100911. https://doi.org/10.1016/j.jfs.2021.100911
Bucher, M., Dietrich, D., & Hauck, A. (2019). Implications of bank regulation for loan supply and bank stability: a dynamic perspective. The European Journal of Finance, 25(16), 1527–1550. https://doi.org/10.1080/1351847X.2019.1614084
Clichici, D. (2016). Relevanţa Ciclicităţii Pentru Direcţiile De Acţiune Ale Băncilor Centrale. 113–123.
Dai, M., Huang, S., & Keppo, J. (2019). Opaque bank assets and optimal equity capital. Journal of Economic Dynamics and Control, 100, 369–394. https://doi.org/10.1016/j.jedc.2019.01.005
Dang, V. D., & Huynh, J. (2024). Bank opacity and stability in an emerging market. International Journal of Emerging Markets, 19(11), 3601–3623. https://doi.org/10.1108/IJOEM-03-2022-0514
Danisman, G. O., & Demirel, P. (2019). Bank risk-taking in developed countries: The influence of market power and bank regulations. Journal of International Financial Markets, Institutions and Money, 59, 202–217. https://doi.org/10.1016/j.intfin.2018.12.007
Farkhodjon, K., & Dsc, K. (2024). http://innovatus.es/index.php/ejbsos Current Analysis and Current Issues of Ensuring the Financial Stability of the Banking System in Uzbekistan. EJBSOS European Journal of Business Startups and Open Society |, 4(3), 2795–9228. http://innovatus.es/index.php/ejbsos
Gana, U., Tijjani, M. S., & Abubakar, S. (2024). Effect of Financial Risk on the Financial Performance of Listed Deposit Money Banks in Nigeria. International Journal of Operational Research in Management, Social Sciences & Education, 10(2), 254–301. https://doi.org/10.48028/iiprds/ijormsse.v10.i2.18
Ghenimi, A., Chaibi, H., & Omri, M. A. B. (2017). The effects of liquidity risk and credit risk on bank stability: Evidence from the MENA region. Borsa Istanbul Review, 17(4), 238–248. https://doi.org/10.1016/j.bir.2017.05.002
Gupta, N., & Mahakud, J. (2020). Ownership, bank size, capitalization and bank performance: Evidence from India. Cogent Economics & Finance, 8(1), 1808282. https://doi.org/10.1080/23322039.2020.1808282
Gupta, N., & Mahakud, J. (2021). Audit committee characteristics and bank performance: evidence from India. Managerial Auditing Journal, 36(6), 813–855. https://doi.org/10.1108/MAJ-04-2020-2622
Haddad, A., El Ammari, A., & Bouri, A. (2021). Impact of Audit Committee Quality on the Financial Performance of Conventional and Islamic Banks. Journal of Risk and Financial Management, 14(4), 176. https://doi.org/10.3390/jrfm14040176
Herwald, S., Voigt, S., & Uhde, A. (2024). The impact of market concentration and market power on banking stability – evidence from Europe. The Journal of Risk Finance, 25(3), 510–536. https://doi.org/10.1108/JRF-03-2023-0075
Ijaz, S., Hassan, A., Tarazi, A., & Fraz, A. (2020). Linking Bank Competition, Financial Stability, And Economic Growth. Journal of Business Economics and Management, 21(1), 200–221. https://doi.org/10.3846/jbem.2020.11761
Juelsrud, R. E., & Larsen, V. H. (2023). Macroeconomic uncertainty and bank lending. Economics Letters, 225, 111041. https://doi.org/10.1016/j.econlet.2023.111041
Mabkhot, H., & Al-Wesabi, H. A. H. (2022). Banks’ Financial Stability and Macroeconomic Key Factors in GCC Countries. Sustainability, 14(23), 15999. https://doi.org/10.3390/su142315999
Marie, M., Kamel, H., & Elbendary, I. (2021). How does internal governance affect banks’ financial stability? Empirical evidence from Egypt. International Journal of Disclosure and Governance, 18(3), 240–255. https://doi.org/10.1057/s41310-021-00110-8
Muchtar, S., Rusliyana Sari, W., Leon, F. M., Rahayu, C., Sultanali, S., & Pratama, P. (2023). Determinants of Banking performance in Association of Southeast Asian Nations (ASEAN) countries. Jurnal Manajemen Dan Pemasaran Jasa, 16(2), 271–286. https://doi.org/10.25105/jmpj.v16i2.17867
Muhri, A., Habbe, A. H., & Rura, Y. (2022). Analisis Perbandingan Stabilitas Bank Syariah dan Bank Konvensional. Owner, 7(1), 346–366. https://doi.org/10.33395/owner.v7i1.1360
Narain, A., Jenkinson, N., Garcia Mora, A., Mascaro, Y., Grolleman, D. J., Kyong Chon, H., Chatain, P.-L., Feyen, E., Gispert, T. A., Adrian, T., & Pazarbasioglu, C. (2020). COVID-19: The Regulatory and Supervisory Implications for the Banking Sector. COVID-19: The Regulatory and Supervisory Implications for the Banking Sector, 1–10. https://doi.org/10.5089/9781513545059.073
Nguyen, D. T., & Le, T. D. (2022). The interrelationships between bank profitability, bank stability and loan growth in Southeast Asia. Cogent Business & Management, 9(1). https://doi.org/10.1080/23311975.2022.2084977
Nguyen, Q. K., & Dang, V. C. (2020). Audit committee structure and bank stability in Vietnam. ACRN Journal of Finance and Risk Perspectives, 8(1), 240–255. https://doi.org/10.35944/jofrp.2019.8.1.015
Obeid, R. (2023). The Impact of Market Power, Credit Risk, and Economic Environment on the Stability of the Arab Banking Sector. International Business Research, 16(10), 1. https://doi.org/10.5539/ibr.v16n10p1
Octavianus, H., & Fachrudin, K. A. (2022). Income Diversification on Stability in Banking Industry: A Systematic Literature Review. International Journal of Environmental, Sustainability, and Social Science, 3(2), 276–287. https://doi.org/10.38142/ijesss.v3i2.212
Ozili, P. K. (2018). Munich Personal RePEc Archive Banking Stability Determinants in Africa. International Journal of Managerial Finance, 14(101825).
Papadopoulos, S. (2019). Competition And Stability In African Banking. The Review of Finance and Banking, 11(2), 43–57. https://doi.org/10.24818/rfb.19.11.02.01
Phan, D. H. B., Iyke, B. N., Sharma, S. S., & Affandi, Y. (2021). Economic policy uncertainty and financial stability–Is there a relation? Economic Modeling, 94, 1018–1029. https://doi.org/10.1016/j.econmod.2020.02.042
Raz, A. F., McGowan, D., & Zhao, T. (2022). The dark side of liquidity regulation: Bank opacity and funding liquidity risk. Journal of Financial Intermediation, 52, 100990. https://doi.org/10.1016/j.jfi.2022.100990
Rizvi, S. A. R., Narayan, P. K., Sakti, A., & Syarifuddin, F. (2020). Role of Islamic banks in Indonesian banking industry: an empirical exploration. Pacific-Basin Finance Journal, 62, 101117. https://doi.org/10.1016/j.pacfin.2019.02.002
Rupeika-Apoga, R., Zaidi, S. H., Thalassinos, Y. E., & Thalassinos, E. I. (2018). Bank Stability: The Case of Nordic and Non-Nordic Banks in Latvia. International Journal of Economics and Business Administration, VI(Issue 2), 39–55. https://doi.org/10.35808/ijeba/156
Shim, J. (2019). Loan portfolio diversification, market structure, and bank stability. Journal of Banking & Finance, 104, 103–115. https://doi.org/10.1016/j.jbankfin.2019.04.006
Tran, D. V., Hassan, M. K., Houston, R., & Rabbani, M. R. (2022). The impact of bank opacity on bank risk‐taking behavior. Journal of Corporate Accounting & Finance, 33(3), 88–101. https://doi.org/10.1002/jcaf.22551
Tran, S., Nguyen, D., Nguyen, K., Nguyen, C., & Nguyen, L. (2023). Income Diversification, Market Structure and Bank Stability: A Cross-country Analysis. Prague Economic Papers, 32(5), 550–568. https://doi.org/10.18267/j.pep.843
Vo, D. H., Nguyen, N. T., & Thi-Hong Van, L. (2021). Financial inclusion and stability in the Asian region using bank-level data. Borsa Istanbul Review, 21(1), 36–43. https://doi.org/10.1016/j.bir.2020.06.003
Yin, H. (2019). Bank globalization and financial stability: International evidence. Research in International Business and Finance, 49, 207–224. https://doi.org/10.1016/j.ribaf.2019.03.009
Yitayaw, M. K., Mogess, Y. K., Feyisa, H. L., Mamo, W. B., & Abdulahi, S. M. (2023). Determinants of bank stability in Ethiopia: A two-step system GMM estimation. Cogent Economics & Finance, 11(1). https://doi.org/10.1080/23322039.2022.2161771
Zhang, R., & Wang, S. (2023). Economic Policy Uncertainty and Bank Stability: An Analysis Based on the Intermediary Effects of Opacity. Sustainability, 15(5), 4084. https://doi.org/10.3390/su15054084