Jakman

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Vol. 7 No. 4 (2026): September

Articles

Credit, Liquidity, and Pandemic Shock Effects on Indonesian Banking Profitability from 2010-2025

R Rousilita Suhendah I Indah Purnama Sari Mardjuni M Mochamad Ramza Rapier Gussa L Lindrawati Lindrawati M Mohammad Sofyan
01 September 2026 Vol. 7 No. 4 (2026): September https://doi.org/10.35912/jakman.v7.n4.p1-20.2026
Abstract
01 Sep 2026

Purpose: This study examines the determinants of banking profitability in Indonesia by analyzing the effects of credit distribution, capital adequacy, liquidity, monetary policy rates, and the COVID-19 shock using a dynamic time series framework.
Research Methodology: Monthly data from January 2010 to June 2025 were analyzed using the Auto-Regressive Distributed Lag (ARDL) and Error Correction Model (ECM) approaches. HAC/Newey-West robust standard errors were employed to improve estimation reliability.
Results: The findings confirm a long-run relationship between the variables. Credit distribution exhibits dynamic effects on profitability, while liquidity significantly affects profitability in both the short and long runs. The COVID-19 variable negatively affects banking profitability, whereas capital adequacy and monetary policy rates are statistically insignificant. The ECM results indicate a gradual adjustment toward long-run equilibrium.
Conclusions: Banking profitability in Indonesia is primarily influenced by liquidity conditions, credit adjustment mechanisms, and external shocks rather than capital adequacy or monetary policy rates.
Limitations: This study uses aggregate banking industry data and has limited explanatory variables.
Contributions: This study contributes to the banking literature by providing dynamic evidence using high-frequency monthly data and an ARDL-ECM framework incorporating structural pandemic shocks.

Keywords: ARDL Model Banking Performance Credit Distribution Liquidity Monetary Policy
How to Cite
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Suhendah, R., Mardjuni, I. P. S., Gussa, M. R. R., Lindrawati, L., & Sofyan, M. (2026). Credit, Liquidity, and Pandemic Shock Effects on Indonesian Banking Profitability from 2010-2025. Jurnal Akuntansi, Keuangan, Dan Manajemen, 7(4), 1–20. https://doi.org/10.35912/jakman.v7.n4.p1-20.2026
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