THE IMPACT OF COVID-19 ON THE PERFORMANCE OF BANKING SECTOR IN INDONESIA STOCK EXCHANGE

• Main Author: Ruth Almira Beata A., Chrisatya
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/56902
• Institution: Institut Teknologi Bandung

The existence of COVID-19 pandemic has made Indonesia’s economy deteriorate, represented by the decline in Gross Domestic Product and Jakarta Composite Index. One of the affected industries is the banking industry, which plays vital role in country’s economy as the intermediary between lenders and depositors, and provider of other financial services. To understand how the vital player in economy withstand during the pandemic, this research is conducted to examine the effects of the declining economy due to COVID-19 on the performance of banking sector in Indonesia Stock Exchange, represented by ability to obtain earnings using available assets and equity. The calculation uses Multiple Linear Regression with dependent variables of Return on Assets (ROA) and Return on Equity (ROE), independent variables of Capital Adequacy Ratio (CAR), Loan to Deposit Ratio (LDR), Operating Expense to Operating Income Ratio (BOPO), and dummy variables of Bank Ownership (OWN) and Commercial Banks based on Business Activities (BUKU). The data used is the quarterly financial report published by Indonesia Financial Services Authority. The research period is June 2019 – September 2020, divided into two groups: pre-COVID and post-COVID. The outcomes of this study shows that there has indeed been a decline of ROA and ROE on average after the pandemic occurs. BOPO is found to have significant negative relation with both ROA and ROE, while LDR is found to have positive relation with both dependent variables. CAR and OWN appear to have significant relation only with ROE. Lastly, there is no significant relation between ROA and ROE with BUKU.