DIVERSIFICATION AND FINANCIAL DISTRESS IN BANKING INDUSTRY (EMPIRICAL STUDIES IN INDONESIA)

Authors

  • Farida Titik Kristanti Departement of Accounting, Faculty of Economics and Business Telkom University Bandung, West Java, Indonesia
  • Deannes Isynuwardhana Departement of Accounting, Faculty of Economics and Business Telkom University Bandung, West Java, Indonesia
  • Sri Rahayu Departement of Accounting, Faculty of Economics and Business Telkom University Bandung, West Java, Indonesia

Abstract

Financial distress especially at the Bank is something that should not be ignored, because if it continues, the impact can affect the economy of a country. The higher the concentration of an industry, the greater the power it has, so they can be more efficient and ultimately more profitable. This study assesses how the bank structure affects the bank's financial distress. Using the purosive sampling method and data of listed banks in the 2014-2017 period, the results of statistical tests with logistic regression showed that Return on Assets (ROA) is a determinant factor for bank financial distress in Indonesia. Banks in Indonesia also tend to be concentrated, which makes banks tend to be more efficient so as to avoid financial distress. This study also proves the validity of the SCP hypothesis and efficiency hypothesis.
Keywords: Bank; Diversification; and Financial distress

Published

2019-01-15

Issue

2018: SCBTII Proceeding

Section

Articles