Record Details

SHOULD BANK DIVERSIFY THEIR INCOME AND CREDIT? EVIDENCE FROM INDONESIA BANKING INDUSTRY

KINERJA: Journal of Business and Economics

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Field Value
 
Title SHOULD BANK DIVERSIFY THEIR INCOME AND CREDIT? EVIDENCE FROM INDONESIA BANKING INDUSTRY
 
Creator Fadli, Jul Aidil
 
Subject M14, M38
 
Description This study aims to examine the effect of income and credit diversification toward bank risk and performance. In this study, diversification was measured using Adjusted Herfindahl-Hirschman Index (AHHI). Bank risk is measured by the standard deviation of ROA, standard deviation of ROE, Z-Score, Nonperforming Loan and Beta. Meanwhile, bank performance is measured by Return on Assets, Return on Equity, risk adjusted ROA and risk adjusted ROE. The robustness test completes this study by dividing the sample into low and high diversified bank. By using panel data of 53 listed and non listed Indonesian banks from 2011 to 2015, the results show that banks get benefit through the implementation of income diversification. Conversely, banks are badly affected through the implementation of loan diversification as it can increase risk and decrease bank performance. The results suggest bank to maximize income diversification by increasing the proportion of non-interest income in the income structure. Furthermore, banks should focus credit distribution that best suits their capabilities.Keywords: bank, credit, diversify, interest income
 
Publisher Faculty of Economics Universitas Atma Jaya Yogyakarta
 
Contributor
 
Date 2019-04-01
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://ojs.uajy.ac.id/index.php/kinerja/article/view/2124
10.24002/kinerja.v23i1.2124
 
Source KINERJA; Vol 23, No 1 (2019): KINERJA; 28-41
2549-1709
0853-6627
 
Language eng
 
Relation https://ojs.uajy.ac.id/index.php/kinerja/article/view/2124/1335
 
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