ANALYSIS OF BANK SOUNDNESS LEVEL USING RGEC METHOD BEFORE AND AFTER THE IMPLEMENTATION OF PSAK 71

The changing economic conditions require dynamic regulations on economic system in order to keep the pace of economic growth. By the dynamic nature we mean making constant changes in economic aspects in efforts to adapt to the current conditions. An example could be the bank regulation which is an important institution in distributing funds to concerned parties. The present study aims to determine the differences in bank soundness level before and after the implementation of PSAK 71 in Indonesian commercial banks. We adopted assessments of Risk Profile, Earnings, Good Corporate Governance and Capital. The study used 21 samples collected using a purposive sampling approach. To analyze our data we used descriptive statistics, normality test, and paired t-test. The results indicate that differences were found between all ratios before and after the implementation of PSAK 71, except NPL ratio.

PENGARUH PEMBIAYAAN BAGI HASIL DAN TINGKAT KESEHATAN BANK TERHADAP KINERJA KEUANGAN DENGAN PEMBIAYAAN BERMASALAH SEBAGAI VARIABEL PEMODERASI

Abstrak: Pengaruh Pembiayaan Bagi Hasil Dan Tingkat Kesehatan Bank Terhadap Kinerja Keuangan Dengan Pembiayaan Bermasalah Sebagai Variabel Pemoderasi Penelitian ini bertujuan untuk mengetahui pengaruh dari variabel independent yaitu pembiayaan bagi hasil dan tingkat kesehatan bank terhadap kinerja keuangan dengan pembiayaan bermasalah sebagai variabel pemoderasi. Populasi yang menjadi obyek dalam penelitian ini adalah Bank Umum Syariah di Indonesia sebanyak 14 Bank yang terdaftar dalam Bank Indonesia. Pengumpulan data dengan metode purposive sampling. Sampel yang digunakan adalah 11 Bank Umum Syariah yang memiliki data sesuai dengan variabel yang dibutuhkan. Metode analisis data yang digunakan yaitu Moderated Regression Analysis (MRA). Penelitian ini menunjukan 1) Pembiayaan bagi hasil tidak memiliki pengaruh tehadap kinerja keuangan (ROA). 2) Tingkat kesehatan bank memiliki pengaruh positif signifikan pada profitabilitas kinerja keuangan perusahaan. 3) Pembiayaan bermasalah (NPF) secara simultan tidak berhasil memperkuat pengaruh pembiayaan bagi hasil terhadap kinerja keuangan. 4) Pembiayaan bermasalah (NPF) secara simultan juga tidak dapat memperkuat pengaruh tingkat kesehatan bank terhadap kinerja keuangan.Kata kunci: Pembiayaan Bagi Hasil, Capital Adequacy Ratio (CAR), Non Performing Financing (NPF), Retun On Asset (ROA)Abstract: Effect of Profit Sharing Financing and Bank Health Level on Financial Performance with Problem Financing as Moderating Variables. This study aims to determine the effect of the independent variable, profit sharing financing and bank soundness on financial performance with problem financing as a moderating variable. The population that is the object of this study is 14 Sharia Commercial Banks in Indonesia, which are registered with Bank Indonesia. Data collection using purposive sampling method. The sample used was 11 Islamic Commercial Banks that have data in accordance with the required variables. The data analysis method used is Moderated Regression Analysis (MRA). This study shows 1) Profit sharing financing has no influence on financial performance (ROA). 2) The level of soundness of a bank has a significant positive effect on the profitability of a company's financial performance. 3) Simultaneous financing (NPF) does not succeed in strengthening the effect of profit sharing financing on financial performance. 4) Simultaneous financing (NPF) also cannot strengthen the effect of bank soundness on financial performance.Keywords: Profit Sharing Financing, Capital Adequacy Ratio (CAR), Non Performing Financing (NPF), Retun On Asset (ROA)

Comparison Analysis Of Camels And Rgec In Assessing The Level Of Health Of Bank (Case Study In Pt Bank Rakyat Indonesia (Persero), Tbk Period 2017-2019)

Bank soundness is the ability of a bank to carry out normal banking operations and is able to fulfill all of its obligations properly in ways that are in accordance with applicable regulations.This study aims to determine the comparison of the soundness level of the bank using the CAMELS method and the RGEC method at PT Bank Rakyat Indonesia (Persero), Tbk for the period 2017-2019. The type of data used is quantitative data and the data source used is secondary data.The results of this study indicate that (1) the soundness level of the bank at PT Bank Rakyat Indonesia (Persero), Tbk for the 2017-2019 period using the CAMELS method in the predicate "Very Healthy", (2) the soundness level of the bank at PT Bank Rakyat Indonesia (Persero), Tbk for the 2017-2019 period using the RGEC method in the predicate "Very Healthy", (3) comparison of the soundness of the bank at PT Bank Rakyat Indonesia (Persero), Tbk 2017-2019 period by using the CAMELS method and the RGEC method shows that there is no difference in the results of the analysis because the two methods both obtain the predicate "Very Healthy".

Analysis of Banking Risk, Good Corporate Governance, Capital and Earning Influences on the Indonesia’s Commercial Bank Performances

This study aims to analyze the effect of commercial bank soundness in Indonesia based on Bank Indonesia regulation number 13/24/DPNP date 25 October 2011, which concern on the implementation guide for Bank Regulation in Indonesia number 13/1/PBI/ 2011 on assessment of bank healthy. In general, those assessments cover risks, good corporate governance (GCG), earning and capital. While, the performance of commercial bank is measured based on credit growth and profit growth. A total of 45 commercial banks listed on the Indonesia Stock Exchange are the population of the study which will be analyzed using the structural equation modeling program - partial least square (SEM-PLS). The results show that credit risk, GCG and earnings have no effect on bank’s performance in Indonesia. Market risk, liquidity risk and capital negatively affect the performance of commercial banks in Indonesia. This research is expected to contribute to the policy making of central banks and also commercial bank organization in particular to improve their performance. This research also contributes to the theory by enriching the discussion on related themes.

Impact of corruption on bank soundness: the moderating impact of Shari’ah supervision

Purpose This study aims to examine whether the soundness of Islamic banks is differently affected by corruption compared to conventional counterparts. Moreover, the Shari’ah supervisory board (SSB), as a cornerstone of Islamic banking and representing a multi-layer corporate governance model, is expected to moderate the influence of corruption on soundness for Islamic banks. Design/methodology/approach This study considers a unique sample of 1,528 observations on 71 Islamic banks and 120 conventional banks operating in 11 emerging and developing Muslim countries over the 2010–2017 period. This study uses generalized least squares regression model and the coefficients are estimated by using random-effects estimator. In addition, to overcome a potential endogeneity concern for corruption and bank stability relationship, this study uses Two-Stage Least Squares regression instrumental variable estimator. Findings The authors find consistent evidence that higher levels of corruption adversely impact the soundness for conventional banks, in favor of the sand the wheel hypothesis in the corruption–development nexus. However, as expected, this study finds a less negative impact of corruption on soundness of Islamic banks. Moreover, SSB moderates the relationship between corruption and soundness of Islamic banks. The findings are robust to a battery of alternative checks. Research limitations/implications Findings of the paper regarding the detrimental impact of corruption on bank soundness justify the urgency of the anti-corruption campaigns in these countries, particularly for conventional banks. Moreover, the findings provide support for the positive contribution of SSBs to overcome the adverse effect of corruption on soundness of Islamic banks and thereby underscoring the need for enforcement and regulatory mechanism for SSBs to be more effective. Originality/value To the best of the authors’ knowledge, this is the first study to examine the moderating impact of Shari’ah supervision on the relationship between corruption and soundness of Islamic banks.

Analysis of Banking Risk, Good Corporate Governance, Capital and Earning Influences on the Indonesia’s Commercial Bank Performances

This study aims to analyze the effect of commercial bank soundness in Indonesia based on Bank Indonesia regulation number 13/24/DPNP date 25 October 2011, which concern on the implementation guide for Bank Regulation in Indonesia number 13/1/PBI/ 2011 on assessment of bank healthy. In general, those assessments cover risks, good corporate governance (GCG), earning and capital. While, the performance of commercial bank is measured based on credit growth and profit growth. A total of 45 commercial banks listed on the Indonesia Stock Exchange are the population of the study which will be analyzed using the structural equation modeling program - partial least square (SEM-PLS). The results show that credit risk, GCG and earnings have no effect on bank’s performance in Indonesia. Market risk, liquidity risk and capital negatively affect the performance of commercial banks in Indonesia. This research is expected to contribute to the policy making of central banks and also commercial bank organization in particular to improve their performance. This research also contributes to the theory by enriching the discussion on related themes.

Analisis Faktor Risk Profile, Good Corporate Governance, Earnings, dan Capital terhadap Profitabilitas pada Bank Syariah Bukopin Periode 2011-2019

In 2019, Bank Syariah Bukopin obtained the lowest profitability value which is proxied by Return On Assets. Therefore, the bank needs to improve its health condition so that the bank can make a profit or profit as expected. This study aims to determine the effect of bank soundness on the level of profitability (ROA) of Bank Syariah Bukopin in 2011-2019. The research method used in this research is quantitative descriptive method with multiple linear regression analysis techniques. The population in this study is Bank Syariah Bukopin and the sample used in this study is Bank Syariah Bukopin in 2011-2019. The dependent variable in this study is profitability (ROA), while the independent variables in this study are the level of financing risk (NPF), the level of liquidity risk (FDR), the level of cost efficiency (BOPO), and the level of capital adequacy (CAR). The results showed that NPF, FDR, BOPO, and CAR had a significant simultaneous effect on profitability (ROA). As for partially, NPF has a negative and insignificant effect on ROA, BOPO has a significant negative effect on ROA, while CAR and FDR have no significant effect on ROA. The implication of this research is that banks need to maintain health conditions by preventing problematic financing, reducing operational costs, and using capital effectively and efficiently so that banks can obtain profitability as expected.

Banking Clustering Study Based On Fuzzy C-mean and Fuzzy Gustafson Kessel

The banking sector as one of the economic drivers plays an important role in society. Over time, bank operations did not only raise funds from the public but were more complex. The development of the banking industry can be seen from the number of banks in Indonesia that have spurred the level of competition. Of course, the bank must pay attention to its health. The use of bank soundness level parameters or RGEC combined with clusters is interesting to study. By using the cluster method, banks can be classified based on the parameters of their health level. This study aims to analyze the RGEC-based bank grouping classification generated by the Fuzzy C-Means and Fuzzy Gustafson Kessel clustering analysis using financial ratio data on 80 conventional banks in Indonesia. The software used in this study is Matlab r2015b. The results showed that the FCM clustering had a smaller standard deviation than FGK so that the first cluster in the FCM showed that the banks were in good condition compared to the other clusters even though the overall condition of banks in Indonesia was good when viewed from their financial performance.

Artificial Intelligence and Bank Soundness: A Done Deal? - Part 1

Banks soundness plays a crucial role in determining economic prosperity. As such, banks are under intense scrutiny to make wise decisions that enhances bank stability. Artificial Intelligence (AI) plays a significant role in changing the way banks operate and service their customers. Banks are becoming more modern and relevant in people’s life as a result. The most significant contribution of AI is it provides a lifeline for bank’s survival. The chapter provides a taxonomy of bank soundness in the face of AI through the lens of CAMELS where C (Capital), A(Asset), M(Management), E(Earnings), L(Liquidity), S(Sensitivity). The taxonomy partitions opportunities from the main strand of CAMELS into distinct categories of 1 (C), 6(A), 17(M), 16 (E), 3(L), 6(S). It is highly evident that banks will soon extinct if they do not embed AI into their operations. As such, AI is a done deal for banks. Yet will AI contribute to bank soundness remains to be seen.

Artificial Intelligence and Bank Soundness: Between the Devil and the Deep Blue Sea - Part 2

Banks have experienced chronic weaknesses as well as frequent crisis over the years. As bank failures are costly and affect global economies, banks are constantly under intense scrutiny by regulators. This makes banks the most highly regulated industry in the world today. As banks grow into the 21st century framework, banks are in need to embrace Artificial Intelligence (AI) to not only to provide personalized world class service to its large database of customers but most importantly to survive. The chapter provides a taxonomy of bank soundness in the face of AI through the lens of CAMELS where C (Capital), A(Asset), M(Management), E(Earnings), L(Liquidity), S(Sensitivity). The taxonomy partitions challenges from the main strand of CAMELS into distinct categories of AI into 1(C), 4(A), 17(M), 8 (E), 1(L), 2(S) categories that banks and regulatory teams need to consider in evaluating AI use in banks. Although AI offers numerous opportunities to enable banks to operate more efficiently and effectively, at the same time banks also need to give assurance that AI ‘do no harm’ to stakeholders. Posing many unresolved questions, it seems that banks are trapped between the devil and the deep blue sea for now.