Non-Interest Income Ratio, Non-Performing Loans, Operating Efficiency, and Bank Profitability: The Moderating Role of Bank Size in Conventional Banks Listed on the Indonesia Stock Exchange (IDX)
This paper asks whether the non-interest income ratio (NII), non-performing loans (NPL), and operating efficiency (BOPO) explain the profitability of conventional banks, and whether bank size changes the strength of each link. The sample is 43 conventional banks listed on the Indonesia Stock Exchange (IDX) from 2021 to 2025, yielding 215 bank-year observations. The analysis draws on signaling theory and the efficient structure hypothesis. A moderated panel regression was estimated after the Chow and Hausman tests pointed to a fixed effect model, with predictors mean-centered. Tests showed groupwise heteroskedasticity and first-order autocorrelation, so standard errors are clustered by bank. Higher BOPO reduces return on assets (ROA) sharply, while larger banks earn more. NII and NPL have no significant direct effect on ROA. Size softens the damage done by a high BOPO but does not condition the effect of NII or NPL. For listed Indonesian banks, profitability therefore depends chiefly on keeping costs under control, and scale offers some protection against inefficiency without offsetting weak credit quality or improving a poor revenue mix. Managers and regulators should therefore prioritize cost efficiency over fee-income expansion.
Authors
- Maat Pono (ORCID: https://orcid.org/0000-0002-8906-8743)
- Andi Ratna Sari Dewi (ORCID: https://orcid.org/0000-0002-3893-8083)
- Arlin MP Gatti
Institutions
- Hasanuddin University (ID)
Publication Details
- Journal
- PENG Jurnal Ekonomi dan Manajemen
- Published
- 2026-11-01
- DOI
- https://doi.org/10.62710/5zrgvn81
- Primary Topic
- Banking Sector Performance and Management
- Type
- article
- Field-Weighted Citation Impact
- 0.00