Open AccessThe Influence of Banking Risk on Efficiency: The Moderating Role of Inflation Rate
Author(s) -
Amalia Ilmiani,
Meliza Meliza
Publication year - 2022
Publication title -
indonesian journal of economics, social, and humanities
Language(s) - English
Resource type - Journals
eISSN - 2656-355X
pISSN - 2656-0267
DOI - 10.31258/ijesh.4.1.73-84
Subject(s) - inflation (cosmology) , market liquidity , monetary economics , liquidity risk , credit risk , economics , ordinary least squares , business , moderation , financial system , econometrics , finance , psychology , social psychology , physics , theoretical physics
The increasing business activities of state-owned banks in Indonesia increases risks. This circumstance can impact the level of state-owned banks’ efficiency. Thus, this research analyses the influence of banking risks on the state-owned banks’ efficiency in Indonesia from 2016 to 2019. Moreover, inflation as one of the macroeconomic factors may also affect the relationship between banking risks and efficiency; hence, this research also examines the inflation role as a moderating variable of this relationship. The samples of this research are all state-owned banks in Indonesia. Ordinary Least Squares (OLS) regression analysis shows that liquidity risk and credit risk have positive and significant influences on efficiency. However, inflation as a moderating variable has no significant influence on efficiency. Inflation also fails to moderate the relationship between liquidity risk and efficiency of state-owned banks in Indonesia. Nevertheless, inflation successful moderates the relationship between credit risk and efficiency.