The Role of Good Corporate Governance in Reducing Credit Risk in Banks Going Public on the Indonesia Stock Exchange

Dika Zanuar Virgantara

Abstract


of Good Corporate Governance (INSOWN) in reducing Credit Risk (NPL) in banking companies listed on the Indonesia Stock Exchange for the period 2008-2021. This study also examines the effect of Good Corporate Governance (INSOWN) as a moderating variable on the relationship between Credit Risk (NPL), Loan to Deposit Ratio (LDR); Capital Adequacy Ratio (CAR); Inflation and Gross Domestic Product (GDP). The sample in this study was 308 sample data obtained from 22 banking sector companies listed on the Indonesia Stock Exchange (IDX) for the period 2008 - 2021. The findings of the data analysis show that the Loan to Deposit Ratio (LDR) has an effect on Credit Risk (NPL) and Capital Adequacy Ratio (CAR) and Inflation and Gross Domestic Product (GDP) have no effect on Credit Risk (NPL). In addition, it can also be seen that Good Corporate Governance (INSOWN) will strengthen the influence of the Loan to Deposit Ratio (LDR) in reducing Credit Risk (NPL) and Good Corporate Governance (INSOWN) weakens the influence of the Capital Adequacy Ratio (CAR) in reducing Credit Risk (NPL).

 

Keywords: Banking Sector; Capital Adequacy Ratio (CAR); Credit Risk (NPL); Good Corporate Governance (INSOWN); Gross Domestic Product (GDP); Inflation; Loan to Deposit Ratio (LDR); Moderation.


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