Christian Wiradendi Wolor

The purpose of this paper is to substantiate the determinants of Indonesian banking profitability before and during the COVID-19 pandemic. Return on assets (ROA), return on equity (ROE), and net interest margin (NIM) were used to measure banking profitability. The research population is 43 banks listed on the Indonesia Stock Exchange in 2020. Purposive sampling has been used to determine the research sample. The criteria are banks issued annual reports during the observation period (2019–2020). The data collection method used is documentation. Data analysis techniques used are descriptive analysis methods and multiple regression analysis. The results of the study indicate that banks experienced a decrease in profitability during the pandemic compared to before the pandemic. ROA before the pandemic was 0.82 and dropped to 0.62 during the pandemic; ROE from 1.76 to 1.32; and NIM became 4.79 from 4.91. Other results show that only Capital Adequacy Ratio CAR and Non-performing Loans (NPL) can determine bank profitability (ROA and ROE) significantly, both before and during the pandemic (the coefficient is –0.112 and –4.856 for CAR; –0.977 and –0.913 for NPL). CAR and NPL influence profitability negatively. Meanwhile, size and liquidity are not able to significantly influence profitability of Indonesian banking (ROA, ROE, and NIM). Bank management that can control NPL well will have a significant impact on profitability.

Acknowledgment
We thank to Faculty of Economics and Business Universitas Diponegoro for the funding of research and publication.

This paper examines how good corporate governance (GCG) affects Indonesian banks’ non-performing loans (NPLs) and its relevance to the current banking sector situation in Indonesia. The research findings provide a comprehensive understanding of the effect of bank-specific factors on NPLs, offering timely and important insights for the banking industry. This quantitative study focuses on commercial banks listed on the Indonesian Stock Exchange in 2021. The observation period spans four years (2018–2021), utilizing 216-unit panel data from 54 banks for analysis. Documentation was used for data collection, and panel data multiple regression analysis was employed as the data analysis technique. The findings indicate that increased board of directors’ meetings are associated with higher NPLs, while having independent board commissioners correlates with lower NPLs. The p-value of the board of director meetings is 0.027, and the coefficient is 0.005037. The p-value of the board of independent board commissioners is 0.017, and the coefficient is –0.00109. Effective GCG implementation is crucial in maintaining credit quality and reducing NPL levels. The p-value of the GCG score is 0.043, and the coefficient is –0.42985. However, the frequency of Board of Commissioners’ meetings does not significantly affect NPLs. The study also shows that the Loan Deposit Ratio (LDR) and bank size negatively and significantly impact NPLs. In contrast, Return on Equity (ROE) and leverage do not significantly affect NPL levels in Indonesian banks. This study provides empirical evidence that underscores the importance of robust GCG, especially during the challenging business conditions triggered by the pandemic.

Acknowledgments
This study received funding from LPPM UNNES, contract number 12.12.4/UN37/PPK.10/2023.