The Determinants of Financial Performance of State-Owned Banks in Indonesia

Purpose: This study is to investigate the determinants of financial performance of state-owned banks in Indonesia. Design/methodology/approach: The method used in this study uses panel data. The data used are secondary data obtained from Bank publication reports for the period 2007 - 2017. The population used in this study is state-owned bank and sample selection based on purposive sampling. Findings: The results showed that the leverage measured by the DER ratio had a negative and significant effect on the financial performance (ROA) of state-owned banks in Indonesia. The effect of Loan deposit ratio, debt equity ratio and capital adequacy ratio together are still low on the financial performance of state-owned banks in Indonesia. Loan deposit ratio that does not have a real effect on financial performance, it is better if the loan distribution is adjusted to the economic conditions faced. An aggressive credit distribution strategy is not always profitable for banks, especially when in uncertain economic conditions.