DETERMINANTS OF BANKING PERFORMANCE IN INDONESIA: A HUMAN CAPITAL PERSPECTIVE

  • Suwinto Johan Fakultas Bisnis, President University
  • Claudia Gita Hapsari Tarumanagara University
Keywords: Banking, Human Resource, Performance

Abstract

The paper aims to study the determinants of banking performance from the human capital perspective. Banking is a service industry that heavily depends on human capital. Therefore, the research will focus on human capital quality in determining banking financial performance. This research analyses 5 ratios: Education Ratio, Average Age Ratio, Gender Composition, number of employees and number of branches. The dependent variable will be the profitability ratio represented by the return on asset (ROA). Linear regression is used to investigate the effect of human capital on banking performance. The software is the Statistical Program for Social Science (SPSS) software to test the research model. The samples are 11 banks which are categorized as Book 4 and Book 3 by the regulation of Bank Indonesia (the central bank of Indonesia). The data and financial performance are obtained from 2015-2018. The empirical results show that the human capital, particularly the total employees and total branch, has a significant influence on banking per-formance. All variables are significant at a <5%.

References

Atmadja, A. S., Su, J. J., & Sharma, P. (2016). Examining the impact of microfinance on microenterprise performance (implications for women-owned microenterprises in Indonesia). International Journal of Social Economics, 43(10), 962–981. https://doi.org/10.1108/IJSE-08-2014-0158

Bank Indonesia (2012) Regulation of Bank Indonesia Number 14/26/PBI/2012 on Bank’s Business Activities and Office Network Based on Core Capital dated 27th December 2012.

Biro Pusat Statistik, Indonesia

Financial Services Authority (2018) Statistical Report of Banking in Indonesia www.ojk.go.id

Inkinen, H. (2015). Review of empirical research on intellectual capital and firm performance. Journal of Intellectual Capital, 16(3), 518–565. https://doi.org/10.1108/JIC-01-2015-0002

Khan, M. (2014). Effects of Education and Training on" Human Capital-And Effects of Human Capital on Economic Activity (A Literature Based Research). International Journal of Information, Business and Management, 6(3), 90.

Nimtrakoon, S. (2015). The relationship between intellectual capital, firms’ market value and financial performance: Empirical evidence from the ASEAN. Journal of Intellectual Capital, 16(3), 587–618. https://doi.org/10.1108/JIC-09-2014-0104

Ozkan, N., Cakan, S., & Kayacan, M. (2017). Intellectual capital and financial performance: A study of the Turkish Banking Sector. Borsa Istanbul Review, 17(3), 190–198. https://doi.org/10.1016/j.bir.2016.03.001

Poh, L. T., Kilicman, A., & Ibrahim, S. N. I. (2018). On intellectual capital and financial performances of banks in Malaysia. Cogent Economics and Finance, 6(1), 1–16. https://doi.org/10.1080/23322039.2018.1453574

Razafindrambinina, D., & Anggreni, T. (2011). Intellectual capital and corporate financial performance of selected listed companies in Indonesia. Malaysian Journal of Economic Studies, 48(1), 61–77.

Sidharta, I., & Affandi, A. (2016). The empirical study on intellectual capital approach toward financial performance on rural banking sectors in Indonesia. International Journal of Economics and Financial Issues, 6(3), 1247–1253.

Suroso, S., Widyastuti, T., Salim, M. N., & Setyawati, I. (2017). Intellectual Capital and Corporate Governance in Financial Performance Indonesia Islamic Banking. International Journal of Economics and Financial Issues, 7(4), 96–103.

Susanto, L. (2017). Intellectual capital and firm performance. International Journal of Economic Perspectives, 11(1), 1621–1631.

Yen, S.B., Lee, A.C., & Arokiasamy, L. (2019). Review of empirical research on intellectual capital and financial performance in the banking. Global Business and Management Research : An International Journal, 11(1), 538–550.
Published
2021-03-31
Abstract viewed = 0 times
PDF downloaded = 0 times