Risk Taking In Conventional Bank Indonesia Reviewed From Capital Regulations, Corporate Governance, And Market Discipline

Arnethalia Nabila Widianto, Fitri Amalinda Harahap, Rio Dhani Laksana, Iman Widhiyanto

Abstract


The COVID-19 pandemic has had a real impact on the banking sector in terms of risk-taking. Excessive risks taken by banks in the form of lending risky assets can increase default in bank returns and impact on customers and shareholders. This research aims to examine bank risk-taking, which is influenced by capital regulations, good corporate governance, and market discipline. We use a panel data regression covering 58 banks in 2019-2022, total 232 observations. Overall, our research results show that market discipline as proxied by funding liquidity has a positive effect on bank risk taking. The influence of and corporate governance on bank risk taking appear to be statistically insignificant. The results of this research are expected to make a contribution to the financial sector, especially regarding risk-taking in banks.

 

Keywords: Bank Risk-Taking, Capital Regulation, Market Discipline, Corporate Governance


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