The Impact of Ownership Structures and Risk Management on Financial Performance of Banks in Indonesia

Abstract

This study investigates the impact of ownership structures and risk management on the financial performance of banks listed on the Indonesia Stock Exchange (IDX) from 2020 to 2022. Specifically, it examines the roles of managerial and institutional ownership, with risk management as a moderating variable. Using multiple linear regression analysis, the study finds that institutional ownership significantly enhances financial performance, while managerial ownership does not show a significant impact. Risk management practices, measured by Non-Performing Loans (NPL), do not directly influence financial performance but have a moderating effect on the relationship between ownership structures and performance, although this effect is not statistically significant. The findings underscore the importance of institutional ownership in driving financial performance and highlight the role of effective risk management in enhancing this relationship. Future research should consider a longer study period and additional variables to provide a more comprehensive understanding of the factors influencing banking performance.