ENTERPRISE RISK MANAGEMENT (ERM) & BANK PROFITABILITY PERFORMANCE IN AUSTRALIAN BANKING INDUSTRY

Abstract

The purpose of this study is to analyse the influence of Enterprise Risk Management (ERM) Implementation towards Bank Profitability Performance in banking industry. Continuing the study of Liem in 2018 in Indonesia, this study focus is in Australia as its comparison. Since Australia is the neighbour country of Indonesia, Australia, as a developed country could act as a great comparison subject for Indonesia, a developing country. This study emphasises on ERM Index and ERM Dimension to analyse the ERM implementation and Net Interest Margin and Return on Average to analyse the Bank Profitability Performance. This study main research question: “Is there any influence of ERM Implementation towards Bank Profitability Performance?” The analysis of this study uses Panel Data Generalized Least Squares (GLS) Regression by STATA M-64. The result of this study confirms that ERM Index has positive influence toward Bank Profitability Performance. However, this study still unable to confirms the influence of ERM Dimension toward Bank Profitability Performance due to inconsistency results. Therefore, this study encourage future researcher to conduct a deeper research regarding the influence of ERM Implementation towards Bank Profitability Performance with a wider range of sample.