HE INFLUENCE OF RISK MANAGEMENT AND GOOD CORPORATE GOVERNANCE TOWARD PROFITABILITY OF INDONESIA CONVENTIONAL BANKS CATEGORY III

Abstract

This research aims to find out the influence of risk management and corporate governance towards profitability of Indonesia conventional banks category III. The profitability is measured by Return on Assets (ROA). The selected variables were credit risk proxied by Non-Performing Loan ratio (NPL), liquidity risk proxied by Loan to Deposit ratio (LDR), market risk proxied by Net Interest Margin (NIM), operational risk proxied by Operating Expense to Operating Income (OEOI), and GCG score. This research uses secondary data obtained from various eligible sources with annual period from 2011-2017, and constructed into panel data. The data analysed through multiple regression method by a statistical software. Ten category III banks were included in this research. The result shows that credit risk and liquidity risk has no significant influence towards profitability. Market risk (NIM) has a positive significant influence towards profitability, while operational risk (OEOI) and GCG score has a negative significant influence towards profitability.