{"title":"EFFECTIVENESS OF RGEC- BANK SOUNDNESS LEVEL AND INFLATION RATE IN PREDICTING POTENTIAL BANKRUPTCY OF BANKS: EVIDENCE FROM INDONESIA","authors":"Anwar Syaifullah, Rizki, Tri Gunarsih","doi":"10.33736/ijbs.6908.2024","DOIUrl":null,"url":null,"abstract":"This study examines the effectiveness of RGEC-based bank soundness and inflation rate in predicting the potential for bankruptcy. The samples in this study are the banking sector companies listed on the Indonesia Stock Exchange (IDX) from 2016 to 2020. Using several proxies of the RGEC-based bank soundness and inflation rate, the results of this study indicate that the loan-to-deposit ratio (LDR), self-assessment of good corporate governance, and capital adequacy ratio (CAR) affect the potential of bankruptcy negatively and significantly. Furthermore, non-performing loans (NPL), return on assets (ROA), and inflation rate do not affect the potential for bankruptcy. The result shows that only two indicators, among four of RGEC-based bank soundness, effectively predict the potential bankruptcy. These results suggest that if banking management wants to predict and anticipate bankruptcy based on the bank’s soundness, it can be considered to see and maintain the LDR and self-assessment of GCG and CAR.","PeriodicalId":13836,"journal":{"name":"International Journal of Business and Society","volume":null,"pages":null},"PeriodicalIF":0.7000,"publicationDate":"2024-04-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Business and Society","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.33736/ijbs.6908.2024","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
This study examines the effectiveness of RGEC-based bank soundness and inflation rate in predicting the potential for bankruptcy. The samples in this study are the banking sector companies listed on the Indonesia Stock Exchange (IDX) from 2016 to 2020. Using several proxies of the RGEC-based bank soundness and inflation rate, the results of this study indicate that the loan-to-deposit ratio (LDR), self-assessment of good corporate governance, and capital adequacy ratio (CAR) affect the potential of bankruptcy negatively and significantly. Furthermore, non-performing loans (NPL), return on assets (ROA), and inflation rate do not affect the potential for bankruptcy. The result shows that only two indicators, among four of RGEC-based bank soundness, effectively predict the potential bankruptcy. These results suggest that if banking management wants to predict and anticipate bankruptcy based on the bank’s soundness, it can be considered to see and maintain the LDR and self-assessment of GCG and CAR.
期刊介绍:
International Journal of Business and Society (IJBS) is an international scholarly journal devoted in publishing high-quality papers using multidisciplinary approaches with a strong emphasis on business, economics and finance. It is a triannual journal published in April, August and December and all articles submitted are in English. Our uniqueness focus on the impact of ever-changing world towards the society based on our niche area of research. IJBS follows a double-blind peer-review process, whereby authors do not know reviewers and vice versa. The journal intends to serve as an outlet with strong theoretical and empirical research and the papers submitted to IJBS should not have been published or be under consideration for publication elsewhere.