Business, Management and Accounting
4 years ago

Debt ratio boosts bank profits, shaping Indonesia's financial landscape.

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Journal of Hunan University
Financial Leverage and Financial Performance of Conventional Banks in Indonesia
Henny Setyo Lestari

Paper Summary

The study looked at how different types of debt affect the financial performance of banks in Indonesia. They analyzed data from 21 banks over ten years and found that having more debt can increase profits, but too much debt can lower returns for shareholders. Interest coverage and cash coverage ratios didn't have a significant impact on financial performance. To make more money for shareholders, banks should pay attention to their debt levels.

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