ZULFIKAR, Rudi and LUKVIARMAN, NIKI and SUHARDJANTO, DJOKO (2017) BANKING REGULATION AND FINANCIAL PERFORMANCE (INSTITUTIONAL THEORY PERSPECTIVE). INTERNATIONAL JOURNAL OF RESEARCH IN COMMERCE & MANAGEMENT, 8 (2). pp. 7-10. ISSN 0976-2183

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Abstract

A research aims to examine the effect of banking regulation toward financial performance. The banking regulation was measured by using a proxy of Corporate Governance, risk disclosure and capital adequacy as measured using a minimum Capital Adequacy Ratio (CAR) with institutional theory perspective. The financial performance was measured by a Return on Assets (RoA). The research used SPSS version 20. An analysis tool used was multiple linear regression to examine the effect of banking regulation toward financial performance. The research used secondary data which obtained from officially published annual report of the company. These samples included 32 companies of the banking industries listed in Indonesia Stock Exhange in period of 2010-2014. The research proves that the Corporate Governance and Capital Adequacy Ratio are positively effected on financial performance although the risk disclosure does not affect the bank’s financial performance. The implication of research indicates that the management of the bank based on the principles of Corporate Governance and fulfillment of minimum capital provides the evidence that can reduce a risk of business and investment in banks and boost financial performance. The risk information does not give confidence to the community on investment in the bank. So, it does not contribute to improve the financial performance. KEYWORDS banking regulation, corporate governance, risk disclosure, minimum capital adequacy, financial performance.

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