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Factors Influencing the Profitability of Listed Indonesian Commercial Banks Before and During Financial Global Crisis

Indonesian Capital Market Review

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Title Factors Influencing the Profitability of Listed Indonesian Commercial Banks Before and During Financial Global Crisis
 
Creator Menur Agustini; Universitas Indonesia
Viverita Viverita; Universitas Indonesia
 
Subject Capital Market
 
Description  As a country with bank-based economy, stability and soundness of its banking industry are cru-cial matters for Indonesia especially in dealing with the crisis period, such as financial global crisis which occurred in 2008. Considering the crucial impact of the crisis, this study aims to examine de-terminants of bank profitability (as the measurement of stability and soundness of banking industry) before and during the crisis period. Using the Generalized Method of Moment (GMM), this study analyzes the profitability of listed commercial banks using unbalanced panel data over the period of 2002-2009. To investigate the impact of recent financial global crisis, this study uses time dummy variable to separate the pre-crisis period (2002-2006) and during the crisis period (2007-2009). Findings of this study show that in the pre-crisis period, bank-specific factors i.e. lagged profitability, bank size, bank capitalization, and diversification and external factors which are inflation and stock market-based financial development statistically and significantly affect bank's profitability. Further-more, the crisis is proven to have significant impact on the effect of inflation and stock market-based financial development toward bank profitability. Whereas, through the general model which is not separate the pre and during crisis periods, this study shows that bank-specific factors such as lagged profitability, bank size, and bank capitalization are proven to have significant effects on bank profit-ability while external factors that also have effects are bank-based financial development and bank concentration. activate javascript
 
Publisher Management Research Center, Department of Management, Faculty of Economics and Business, U
 
Contributor —
 
Date 2012-01-03
 
Type Peer-reviewed Article
 
Format application/mbox
 
Identifier http://journal.ui.ac.id/index.php/icmr/article/view/3666
 
Source Indonesian Capital Market Review; Vol 4, No 1 (2012): January 2012
 
Language en