Liquidity Risk Effect On The Performance Of Banks In Indonesia (Study of Banking Companies Listed on the Stock Exchange)

Widiastuti, Yeni and Hadiwidjaja, Rini Dwiyani (2015) Liquidity Risk Effect On The Performance Of Banks In Indonesia (Study of Banking Companies Listed on the Stock Exchange). In: International Conference on Entrepreeurship, Bisnis and Social Science (ICEBSS), 13-14 Agustus 2015, Inna Garuda Hotel Yogyakarta.

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Abstract

This research is a descriptive verification research, which means verification of descriptive data that provides answers to the problems faced by explaining the causal relationships between variables through hypothesis testing. The variables in this study consisted of independent variables and dependent variable. Independent variables are Deposito( X 1 ), Liquidity Gap (X 2 ), NPLs (X 3 ) and Bank's Size (X 4 ), while the dependent variable is Profitability (Y). The data in this study are secondary data from the financial statements of banks listed on the Indonesia Stock Exchange (IDX) for the period 2010 to 2013. The sample was the entire Banking Companies listed on the Indonesia Stock Exchange in the period of 2010-2013 (a total of 32 banks). The results showed that the liquidity risk affecting the bank's profitability significantly, the number of deposits and the level of NPLs are the two factors that affect the liquidity risk of banking companies in Indonesia. The first hypothesis is that the increase in bank deposits will increase the revenues received. There are positive changes in the probability of the banking system as a result of the increase in deposits. These results indicate that bank deposits will grow, and it will help the bank to increase their profits. The second hypothesis is that the assumption that the increase in the liquidity gap will lead to an increase in bank earnings showed no significant results. There is a positive change in the probability of the banking system caused by a fundamental change in the liquidity gap. The third hypothesis is that the increase in NPLs will lead to a decrease in bank profitability. There is a negative change in the probability of the banking system caused by changes in NPLs..

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