The Relationship between Debt Securities Issuance and Operational Performance: An Empirical Study of Banks in Indonesia

This study aims to find out what determinants have the most influence in improving bank operational performance, including profit
efficiency policies or debt securities issuance. Profit efficiency policy is proxied by net interest margin, which describes the input and output
of the bank’s production activities as an intermediary institution. Profit efficiency contributes more influence than issuing debt securities.
The issuance of bonds is a proxy for bank policy in issuing debt securities. Researchers investigated some views stating that issuing debt is
risky since it will negatively affect bank operational performance. This research differs from previous studies in that it used a non-linear test
to find the optimal value indicating that additional debt securities issuance can improve bank operational performance. Based on ownership,
the samples were separated into two categories, government-owned banks and private banks. The policy of issuing debt securities to private
banks shows an inverted U-shape, whereas government-owned banks are U-shaped. This research uses a perceptual map to visualize the
implementation of profit efficiency policies and of debt securities issuance in sample banks. This diagram technique will contribute to our
understanding of how to implement managerial policies for profit efficiency and issuance debt securities in banks.