The Influence Of Good Corporate Governance, Operational Efficiency, Capital Adequacy, And Credit Risk On Financial Performance (An Empirical Study of Conventional Banking Companies Listed on the Indonesia Stock Exchange (IDX) from 2021 to 2024)

Abstract

This study aims to examine the effects of Good Corporate Governance, operational efficiency, capital adequacy, and credit risk on the financial performance of conventional banking companies listed on the Indonesia Stock Exchange during 2021–2024. Good Corporate Governance is proxied by the proportion of Independent Commissioners (KI), operational efficiency by the Operating Expenses to Operating Income ratio (BOPO), capital adequacy by the Capital Adequacy Ratio (CAR), credit risk by Non-Performing Loans (NPL), and financial performance by Return on Assets (ROA). Using a quantitative approach, this study employed multiple linear regression analysis with SPSS Version 26. The population comprised conventional banking companies listed on the Indonesia Stock Exchange during the study period. Purposive sampling resulted in 32 companies and 128 observations. The results indicate that Good Corporate Governance, as measured by Independent Commissioners, has no significant effect on financial performance. Operational efficiency, measured by BOPO, has a negative and significant effect on financial performance. Meanwhile, CAR and NPL have no significant effects on financial performance. Simultaneously, Good Corporate Governance, operational efficiency, capital adequacy, and credit risk significantly affect financial performance. These findings indicate that operational efficiency represents an important factor in improving bank financial performance. The study provides practical consideration for banking companies to strengthen financial performance through more effective operational cost management.