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.

The influence of Natural Certainty Contract (NCC) and Natural Uncertainty Contract (NUC) financings on the financial sustainability of Islamic commercial banks in Indonesia

“…The probability value of the Z variable (profitability) is 0.00 < 0.05, and the coefficient of Z is positive, indicating that profitability has a positive impact on financial sustainability. This research aligns with studies conducted by Marheni (2022), Rianasari & Pangestuti (2016), Sholikah & Miranti (2020), and Sutikno & Aisyah (2022), stating that ROA has a positive and significant effect on financial sustainability. Consistent with Marheni's study (2022), if a company has high profitability, it will become more active in implementing financial sustainability because the implementation of financial sustainability also requires expenses.…”

“…profits (Haq, 2015). According to research (Rianasari & Pangestuti, 2016;Sholikah & Miranti, 2020;Sutikno & Aisyah, 2022), profitability (ROA) has a positive and significant impact on financial sustainability. In line with a study by Marheni (2022), a high company profit leads to increased activity in implementing financial sustainability because it involves costs.…”

Analysis of the Effects of Green Banking, Capital Adequacy Ratio on Profitability Growth with Institutional Ownership as a Moderating Variable

“…This is indicated by a coefficient value of 0.001493 and a probability t-statistic value of 0.0000, which is smaller than the 5% significance level (Hastuti & Suhendah, 2015). This suggests that institutional investors or institutions can assess the ability of Shariah banks to effectively manage their financial risks, as CAR indicates good liquidity (Sutikno & Aisyah, 2022). Additionally, the resilience of Shariah banks during the pandemic has increased investor confidence in investing their capital, given the overall upward trend in profitability growth.…”

“…Institutional ownership refers to the ownership of shares in a specific company by institutional or corporate entities (Melati, 2020). It can be seen as a controlling stake held by institutions that invest a significant amount of capital in the company (Sutikno & Aisyah, 2022).…”

Credit Risk and financial performance banks: a panel data analysis

“…The OLS regression model assumes no relationship exists between independent and predictor variables. The correlation coefficient between predictors is the most straightforward measure to identify the problem of multicollinearity in panel data (Gujarati, 2003;Sutikno, 2022). The correlation coefficient > 0.811 indicates the presence of multicollinearity in the panel data (Dougherty, 2011;Kennedy, 2008).…”