Financial Performance and Financial Sustainability: The Role of Institutional Ownership as Moderating Variable

Abstract

This study aimed to examine the impact of financial performance expressed in ROA and NPF on financial sustainability with institutional ownership as a moderating variable for Islamic banks in Indonesia. Quantitative research is used in this study using related methods. The research target is all Islamic commercial banks in Indonesia registered with the Financial Services Authority (OJK). Sampling used the purposive sampling method and resulted in nine Islamic commercial banks in Indonesia. The data in this study is secondary data in the form of annual financial reports from 2015 to 2019. Panel data regression analysis was used with SPSS version 25 software for data analysis. The results showed that ROA had a significant positive effect on financial sustainability. And, NPF has a significant negative impact on financial sustainability. Meanwhile, institutional ownership weakens the relationship between ROA and financial sustainability and does not have a moderating role in the relationship between NPF and financial sustainability. The coefficient of determination test shows that ROA, NPF, and the moderating role of institutional ownership can explain the 75.6% relationship on financial sustainability.