Analysis of the Influence of Banking Performance and Macroeconomic on Banking Stability in Indonesia

Abstract

This study aims to analyze the effect of banking and macroeconomic performance on banking stability in Indonesia. The main factor that causes fluctuations in banking stability is influenced by internal factors (fundamental factors) are factors that originate from within the company and can be controlled by company management, while external factors (non-fundamental factors) are caused by economic conditions such as interest rates and government policies. The purpose of this study is to analyze the effect of banking and macroeconomic performance on banking stability in Indonesia. The researcher uses the period of years after the issuance of OJK rules from 2014 to 2021. This study uses dynamic panel regression with Generalized Method of Moments (GMM) estimation. The result of this research is that the variables of NPL, GDP, inflation, and Bi Rate have a significant influence on banking stability.