THE IMPACT OF RISK MANAGEMENT IMPLEMENTATION ON THE FINANCIAL PERFORMANCE OF THE BANKING INDUSTRY
Keywords:
Risk Management, Bank Performance IndicatorAbstract
This study aimed to analyze the effect of risk management implementation on the financial performance of the banking industry in Indonesia. The problem examined was how Non-Performing Loan (NPL), Net Interest Margin (NIM), Loan to Deposit Ratio (LDR), and Operating Expenses to Operating Income (BOPO) influenced Return on Assets (ROA) as an indicator of financial performance. The study used panel data from 24 banks listed on the Indonesia Stock Exchange during the 2022–2024 period and applied panel data regression with a Fixed Effect Model (FEM) approach. The results show that NPL, LDR, and BOPO have a negative and significant effect on ROA, while NIM has a positive and significant effect on ROA. These findings indicate that effective management of credit risk, liquidity, and operational efficiency is essential to improve profitability and maintain the financial performance stability of banks.
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