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Determinants of Bank Profitability with Size as Moderating Variable

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  • Mohammad Sofie Abdul Hasan
  • Adler Haymans Manurung
  • Bahtiar Usman

Abstract

This paper has objective to explore determinant of bank profitability with size as moderating variable. Internal ratio and macroeconomics variable are used to determine bank profitability. Return on Asset and Return on Equity are variable of bank profitability. Model Panel Data is used to determine bank profitability in Indonesia for period of 2007 to 2018. This research found that Net Interest Margin, Ratio of Operational Expenses to Operational Profit, Capital Adequacy Ratio and Loan to Deposits Ratio significantly affected profitability bank of return of Equity. Fed Rate and Consumption of Cement significant affected bank profitability of return on asset. Net Interest Margin, Non-Performing Loan, Ratio of Operational Expenses to Operational profit, and Loan to Deposits Ratio significantly affected profitability bank of Return on Equity. Consumption of Cement significant affected bank profitability of Return on Equity. Asset as moderating variable with CAR, BOPO, Consumption of cement and Fed Rate have significant to affect bank profitability of return on assets. Asset with Consumption of cement has and negative significant to affect bank profitability of Return on Equity. JEL classification numbers: G1, G21, E58

Suggested Citation

  • Mohammad Sofie Abdul Hasan & Adler Haymans Manurung & Bahtiar Usman, 2020. "Determinants of Bank Profitability with Size as Moderating Variable," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(3), pages 1-7.
    • Handle: RePEc:spt:apfiba:v:10:y:2020:i:3:f:10_3_7
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    References listed on IDEAS

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    Cited by:

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    2. Shasnil Avinesh Chand & Ronald Ravinesh Kumar & Peter Josef Stauvermann & Muhammad Shahbaz, 2024. "Determinants of Bank Profitability—Do Institutions, Globalization, and Global Uncertainty Matter for Banks in Island Economies? The Case of Fiji," JRFM, MDPI, vol. 17(6), pages 1-26, May.
    3. Taslima Akther & Mushfiqur Rahman & Md. Mufidur Rahman, 2023. "Factors influencing commercial bank profitability in Bangladesh: a panel data approach," Future Business Journal, Springer, vol. 9(1), pages 1-20, December.
    4. Md Saimum Hossain & Faruque Ahamed, 2021. "Comprehensive Analysis On Determinants Of Bank Profitability In Bangladesh," Papers 2105.14198, arXiv.org, revised Jun 2021.
    5. Torlaković Anes & Proho Mahir & Hadžiahmetović-Milišić Nejra & Dedović Lejla, 2024. "Impact of size of banks and insurance companies on their profitability in Bosnia and Herzegovina," Journal of Forensic Accounting Profession, Sciendo, vol. 4(1), pages 33-44.
    6. Sulaeman Rahman Nidar & Mokhamad Anwar & Ratna Komara & Layyinaturrobaniyah Layyinaturrobaniyah, 2020. "Determinant of regional development bank efficiency for their sustainability issues," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(1), pages 1133-1145, September.
    7. Celly Septine Mayliza & Adler Haymans Manurung & Benny Hutahayan, 2020. "Analysis of The Effect of Financial Ratios to Probability Default of Indonesia’s Coal Mining Company," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(5), pages 1-9.
    8. Hussain A. Bekhet & Ahmad Mohammad Alsmadi & Mohamed Khudari, 2020. "Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 359-375, October.

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    More about this item

    Keywords

    Profitability bank; Return on Asset; Return on Equity; Net Interest Margin; Non-Performing Loan; Capital Adequacy Ratio; Loan to Deposit Ratio; Oil Price; Exchange Rate; Fed Rate and Consumption of Cement.;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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