Capitalization Chronicles: Unraveling the Impact on Bank Profitability
This study seeks to investigate the influence of capitalization on the profitability of banks, focusing on financial data of 34 Indonesian commercial public banks over the period of 2013-2022. The researcher evaluates the capital ratio, a critical measure of financial stability, for its impact on k...
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| Format: | Article |
| Language: | Indonesian |
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Petra Christian University
2025-01-01
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| Series: | Jurnal Akuntansi dan Keuangan |
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| Online Access: | https://jurnalakuntansi.petra.ac.id/index.php/aku/article/view/29063 |
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| _version_ | 1832591092938178560 |
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| author | Ririen Setiati Riyanti |
| author_facet | Ririen Setiati Riyanti |
| author_sort | Ririen Setiati Riyanti |
| collection | DOAJ |
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This study seeks to investigate the influence of capitalization on the profitability of banks, focusing on financial data of 34 Indonesian commercial public banks over the period of 2013-2022. The researcher evaluates the capital ratio, a critical measure of financial stability, for its impact on key profitability metrics such as Return on Assets (ROA), Return on Equity (ROE), Net Interest Margin (NIM), and Pre-Provision Profitability Ratio (PPR). By utilizing the Fixed Effect Model (FEM), the results of this study show mixed effects of capital ratio on profitability across profit measures. Further, the finding shows an inverted U-shaped impact of capital ratio on bank profit when ROA is used. This suggests that a higher capital ratio increases a bank’s ability to generate profits on its assets up only to a critical point. A further increase in the capital ratio beyond this point tends to adversely affect profitability.
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| format | Article |
| id | doaj-art-4cea1385e8d84c97a8bdea4f622c78ce |
| institution | Kabale University |
| issn | 1411-0288 2338-8137 |
| language | Indonesian |
| publishDate | 2025-01-01 |
| publisher | Petra Christian University |
| record_format | Article |
| series | Jurnal Akuntansi dan Keuangan |
| spelling | doaj-art-4cea1385e8d84c97a8bdea4f622c78ce2025-01-23T03:13:41ZindPetra Christian UniversityJurnal Akuntansi dan Keuangan1411-02882338-81372025-01-0126210.9744/jak.26.2.161-168Capitalization Chronicles: Unraveling the Impact on Bank ProfitabilityRirien Setiati Riyanti0Universitas Indonesia This study seeks to investigate the influence of capitalization on the profitability of banks, focusing on financial data of 34 Indonesian commercial public banks over the period of 2013-2022. The researcher evaluates the capital ratio, a critical measure of financial stability, for its impact on key profitability metrics such as Return on Assets (ROA), Return on Equity (ROE), Net Interest Margin (NIM), and Pre-Provision Profitability Ratio (PPR). By utilizing the Fixed Effect Model (FEM), the results of this study show mixed effects of capital ratio on profitability across profit measures. Further, the finding shows an inverted U-shaped impact of capital ratio on bank profit when ROA is used. This suggests that a higher capital ratio increases a bank’s ability to generate profits on its assets up only to a critical point. A further increase in the capital ratio beyond this point tends to adversely affect profitability. https://jurnalakuntansi.petra.ac.id/index.php/aku/article/view/29063Indonesiacapital ratiocapitalizationcommercial bankspublic banksreturn on assets |
| spellingShingle | Ririen Setiati Riyanti Capitalization Chronicles: Unraveling the Impact on Bank Profitability Jurnal Akuntansi dan Keuangan Indonesia capital ratio capitalization commercial banks public banks return on assets |
| title | Capitalization Chronicles: Unraveling the Impact on Bank Profitability |
| title_full | Capitalization Chronicles: Unraveling the Impact on Bank Profitability |
| title_fullStr | Capitalization Chronicles: Unraveling the Impact on Bank Profitability |
| title_full_unstemmed | Capitalization Chronicles: Unraveling the Impact on Bank Profitability |
| title_short | Capitalization Chronicles: Unraveling the Impact on Bank Profitability |
| title_sort | capitalization chronicles unraveling the impact on bank profitability |
| topic | Indonesia capital ratio capitalization commercial banks public banks return on assets |
| url | https://jurnalakuntansi.petra.ac.id/index.php/aku/article/view/29063 |
| work_keys_str_mv | AT ririensetiatiriyanti capitalizationchroniclesunravelingtheimpactonbankprofitability |