Does social media affect banking industry financial performance in Indonesia

Abstract

In the broader context, financial performance refers to the degree to which financial targets are achieved and is an essential component of risk management in finance. It is the method of calculating the outcomes of the policies and operations of an organisation in monetary terms. It is used over a given period of time to assess the overall financial health of companies. It can also compare related companies in the same industry or compare aggregated industries or sectors. However, technological developments have forced various industries to adapt to social media to communicate with consumers, including the banking industry, to ensure their financial performance. Also, good communication with customers will improve banking financial performance. Thus, the present study is conducted to study whether social media affects the banking industry's financial performance. The secondary data were collected from the Financial Services Authority of Indonesia for 30 banking institutions and the data analysed using the Pearson rank correlation. The results showed that social media, such as Facebook and Instagram, significantly affect the banking industry's financial performance. We found that other kinds of social media, namely Facebook, have no significant effect on financial performance. In conclusion, this study confirms that social media is one crucial factor that influences the banking industry financial performance in Indonesia's context.