Exploring of Ownership Structure as a Moderator in the Income Diversification-Bank Performance Nexus: Evidence from Indonesian Banks during the Covid-19 Pandemic

This study investigates the banking industry's resilience in maintaining its performance during a crisis by examining the impact of an income diversification strategy and considering the ownership structure. Moderated Regression Analysis was employed to explore bank performance proxy by Return on Assets (ROA) ratio as the dependent variable. For the Independent variable, we used income diversification and ownership structure. The research sample comes from 83 banks in Indonesia, consisting of 4 state-owned banks, 26 regional government banks, 30 private banks, and 23 foreign banks in the 2020-2021 quarterly. The results indicate that diversification has no significant effect on bank performance during the Covid-19 pandemic at commercial banks in Indonesia but has a positive direction. The ownership structure was a pure moderator that weakened the relationship between income diversification and bank performance. Meanwhile, state-owned banks need to be more creative in exploring non-interest income sources than private and foreign banks. The Covid-19 pandemic has had a significant impact on the global economy, including the banking sector in Indonesia. However, the Indonesian banking industry has shown resilience during the pandemic. The Indonesian government has implemented several policies to support the banking sector during the pandemic.