How Do Financial Performance and Firm Size Influence Financial Distress? A Study of Digital Banks and Traditional Banks Offering Digital Services (2018-2023)

Financial distress is a decline in financial condition before bankruptcy, one sign of which is negative earnings for two consecutive years. If not handled immediately, this can lead to bankruptcy. This study aims to analyze the effect of independent variables such as Return on Assets (ROA), Loan to Deposit Ratio (LDR), Non-Performing Loan (NPL), Operating Expenses to Operating Income (BOPO), Capital Adequacy Ratio (CAR), and firm size on financial distress in commercial banks that provide digital services and digital banks in the period 2018-2023. The research method used is quantitative method with logistic regression analysis, and the sample is selected by purposive sampling. A total of 66 samples from 11 digital bank companies and commercial banks registered with OJK for the period 2018-2023 were analyzed. The results showed that simultaneously, the variables ROA, CAR, NPL, LDR, BOPO, and company size had a significant effect on financial distress. Partially, only ROA and NPL have a significant effect, while CAR, LDR, BOPO, and company size have no significant effect on financial distress.