Volume 3 Issue 2 | 2026 | View PDF
Paper Id: IJMSM-V3I2P139
doi: 10.71141/30485037/V3I2P139

The Effect of Bank Soundness Based on Risk-Based Bank Rating on Banking Financial Performance: An Empirical Study of IDX-IC Listed Banking Stocks on the Indonesia Stock Exchange, 2020-2024

Dimas Putra Devito, Mukti Soma

Citation:
Dimas Putra Devito, Mukti Soma, "The Effect of Bank Soundness Based on Risk-Based Bank Rating on Banking Financial Performance: An Empirical Study of IDX-IC Listed Banking Stocks on the Indonesia Stock Exchange, 2020-2024" International Journal of Multidisciplinary on Science and Management, Vol. 3, No. 2, pp. 327-333, 2026.

Abstract:
This study analyzes the effect of bank soundness, measured through the Risk-Based Bank Rating (RBBR) approach, on the financial performance of banking companies listed on the Indonesia Stock Exchange. RBBR is represented by liquidity risk, credit risk, operational risk, good corporate governance, market-related profitability, and capital adequacy, while financial performance is proxied by Return on Assets (ROA). The study applies a quantitative causal design using secondary annual-report data from 14 banking companies observed during 2020-2024, producing 70 firm-year observations. Panel data regression is employed with model selection tests and robust standard errors to address heteroskedasticity. The empirical results show that the independent variables jointly have a significant effect on ROA. Partially, the operating expenses to operating income ratio (BOPO) has a negative and significant effect on ROA, whereas the independent commissioner ratio has a positive and significant effect. Loan to Deposit Ratio, Non-Performing Loan, Net Interest Margin, and Capital Adequacy Ratio are not statistically significant. These findings imply that operational efficiency and independent governance are more decisive for bank profitability than liquidity, credit risk, interest margin, or capital adequacy within the observed period.

Keywords: Bank Health, Banking, Capital Adequacy Ratio, Financial Performance, Good Corporate Governance, Risk-Based Bank Rating, Return on Assets.

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