JEFMS Journal

ABSTRACT:

Banking has a major contribution to the success of the country's economy, because of its role as part of the financial system which acts as an intermediary to facilitate economic activity. This research aims to analyze the influence of internal macroeconomic factors that can formulate strategies for developing banking financial performance, and how much influence these factors have on banking financial performance. The research design used is explanatory research. The object of research namely; Conventional banks and Islamic banks in Bitung City, North Sulawesi, Indonesia, were selected by purposive sampling. The research was carried out from August to October 2022. The data used in this study are secondary data obtained from; financial reports of selected banks. Inflation, Interest Rates, Composite Stock Price Index, Exchange Rates, and Gross Domestic Gross (GDP), Capital Adequacy Ratio (CAR), and Return on Assets (ROA). Inflation, Exchange Rate, Capital Adequacy Ratio (CAR), and Return on Assets (ROA). The enormity of the influence of the variables of macroeconomic conditions on banking financial performance is76.9%, while the remaining 23.1% is the influence of other variables outside this research.

KEYWORDS:

Banking, finance, macroeconomics, performance

REFERENCES:

1) Abdesslem, RB, Chkir, I., and Dabbou, H. (2022). Is managerial ability a moderator? The effect of credit risk and liquidity risk on the likelihood of bank default. Journal of International Review of Financial Analysis. 80 (3). 102 - 112. https://doi.org/10.1016/j.irfa.2022.102044.

2) Alquist, R., Chabot, BR, and Yamarthy, R. (2022). The price of property rights: Institutions, finance, and economic growth. Journal of International Economics. 137 (7). 594 - 604. https://doi.org/10.1016/j.jinteco.2022.103594.

3) Ashraf, BN, Qian, N., and Shen, Y.V. (2021). The impact of trade and financial openness on bank loan pricing: Evidence from emerging economies. Journal of Emerging Markets Review. 47 (6). 107 - 118. https://doi.org/10.1016/j.ememar.2021.100793.

4) Aursland, TA, Frankovic, I., Kanik, B., and Saxegaard, M. (2020). State-dependent fiscal multipliers in NORA - A DSGE model for fiscal policy analysis in Norway. Journal of Economic Modeling. 93 (12). 321-353. https://doi.org/10.1016/j.econmod.2020.07.017.

5) Ayeni., E, and Fanibuyan, O. (2022). The dynamics of uncertainty, macroeconomic variables, and capital market performance: A case study of Nigeria. Journal Research in Globalization. 5 (12). 107 - 119. https://doi.org/10.1016/j.resglo.2022.100107.

6) Benbouzid, N., Kumar, A., Mallick, S.K, Sousa, R.M, and Stojanovic, A. (2022). Bank credit risk and macro-prudential policies: Role of counter-cyclical capital buffer. Journal of Financial Stability. 63 (12). 84 - 94. https://doi.org/10.1016/j.jfs.2022.101084.

7) Berger, AN, Oztekin, O., and Roman, R.A (2023). Geographic Deregulation and Bank Capital Structure. Journal of Banking & Finance. 10 (1). 1 - 15. https://doi.org/10.1016/j.jbankfin.2023.106761.

8) Blake, D., and Cairns, A.J.G. (2021). Longevity risk and capital markets: The 2019-20 update. Journal Insurance: Mathematics and Economics. 99 (7). 395 - 439. https://doi.org/10.1016/j.insmatheco.2021.04.001.

9) Buyukbasaran, T., Can, G.K, and Kucuk, H. (2022). Macroeconomic effects of bank lending in an emerging economy: Evidence from Turkey. Journal of Economic Modeling. 115 (10). 946 - 956. https://doi.org/10.1016/j.econmod.2022.105946.

10) Chen, S., Han, X., Zhang, Z., and Zhao, X. (2023). ESG investment in China: Doing well by doing good. Pacific-Basin Finance Journal. 77 (2). 101 - 111. https://doi.org/10.1016/j.pacfin.2022.101907.

11) Chernov, M., Creal, D., and Hordahl, P. (2023). Sovereign credit and exchange rate risks: Evidence from Asia-Pacific local currency bonds. Journal of International Economics. 140 (1). 103 - 114. https://doi.org/10.1016/j.jinteco.2022.103692.

12) Cieslak, A., and Schrimpf, A. (2019). Non-monetary news in central bank communication. Journal of International Economics. 118 (5). 293 - 315. https://doi.org/10.1016/j.jinteco.2019.01.012.

13) Colangelo, G., Facchini, F., Ranieri, L., Starace, G., and Vitti, M. (2023). Assessment of carbon emissions' effects on the investments in conventional and innovative waste-to-energy treatments. Journal of Cleaner Production. 388 (2). 135 - 145. https://doi.org/10.1016/j.jclepro.2023.135849.

14) Fasanya, I.O., and Adekoya, O.B. (2022). Macroeconomic risk factors and REITs returns predictability in African markets: Evidence from a new approach. African Scientific Journal. 17 (9). 129 - 139. https://doi.org/10.1016/j.sciaf.2022.e01292.

15) Franz, D.J. (2023). Quantitative research without measurement. Reinterpreting the better-than-average-effect. Journal of New Ideas in Psychology. 68 (1), 100 - 110. https://doi.org/10.1016/j.neweapsych.2022.100976.

16) Frohm, E. (2023). Dominant currencies and the export supply channel. Journal International Economics. 173 (5). 1 - 18. https://doi.org/10.1016/j.inteco.2022.10.005.

17) Fromentin, V. (2022). Time-varying causality between stock prices and macroeconomic fundamentals: Connection or disconnection?. Journal Finance Research Letters. 49 (10). 103 - 113. https://doi.org/10.1016/j.frl.2022.103073.

18) Huang, B., Punzi, M.T., and Wu, Y. (2021). Do banks price environmental transition risks? Evidence from a quasi-natural experiment in China. Journal of Corporate Finance. 69 (8). 101 - 111. https://doi.org/10.1016/j.jcorpfin.2021.101983.

19) Huawei, T. (2022). Does gross domestic product, inflation, total investment, and exchange rate matter in natural resources commodity prices volatility. Journal Resources Policy. 79 (12). 103 - 114. https://doi.org/10.1016/j.resourpol.2022.103013.

20) Kidron, A., and Peretz, H.V. (2022). Linking psychological and social capital to organizational performance: A moderated mediation of organizational trust and proactive behavior. European Management Journal. 2 (12). 1 - 10. https://doi.org/10.1016/j.emj.2022.11.008.

21) Lian, Y., Gao, J., and Ye, T. (2022). How does green credit affect the financial performance of commercial banks? Evidence from China. Journal of Cleaner Production. 344 (4). 131 - 145. https://doi.org/10.1016/j.jclepro.2022.131069.

22) Mai Le, V.P,, Matthews, K., Meenagh, D., Minford, P., and Xiao, Z. (2021). Shadow banks, banking policies and China's macroeconomic fluctuations. Journal of International Money and Finance. 116 (9). 415-427. https://doi.org/10.1016/j.jimonfin.2021.102415.

23) Mamba, L.S, Maziya, G.M, and Magagula, V.M. (2023). Optimal investment strategies and profit share distributions: A stochastic control approach. African Scientific Journal. 19 (3). 1 - 12. https://doi.org/10.1016/j.sciaf.2022.e01516.

24) Najam, H., Abbas, J., Otero, S.A., Dogan, E., and Sial, M.S. (2022). Towards green recovery: Can banks achieve financial sustainability through income diversification in ASEAN countries?. Journal of Economic Analysis and Policy. 76 (12). 522 - 533. https://doi.org/10.1016/j.eap.2022.09.004.

25) Ogawa, T. (2022). Welfare implications of bank capital requirements under dynamic default decisions. Journal of Economic Dynamics and Control. 138 (5). 360 - 370. https://doi.org/10.1016/j.jedc.2022.104360.

26) Parnes, D. (2022). Banks' off-balance sheet manipulations. Journal The Quarterly Review of Economics and Finance. 86 (11). 314 - 331. https://doi.org/10.1016/j.qref.2022.07.011.

27) Sasu, D.O, Dzeha, G.C, Boachie, C., and Abor, J.Y. (2022). The role of board dynamics in explaining payout policy and shareholders' wealth: Evidence from the banking sector in Africa. Journal Research in Globalization. 5 (12). 1000 - 1010. https://doi.org/10.1016/j.resglo.2022.100086.

28) Szczepaniak, M., Geise, A., and Bariyah, N. (2022). Impact of institutional determinants on income inequalities in Indonesia during the Reformation Era. Journal of Asian Economics. 82 (10). 152 - 163. https://doi.org/10.1016/j.asieco.2022.101526.

29) Tarkom, A., and Ujah, N.U. (2023). Inflation, interest rate, and firm efficiency: The impact of policy uncertainty. Journal of International Money and Finance. 131 (3). 1 - 12. https://doi.org/10.1016/j.jimonfin.2022.102799.

30) Thanh Ha, L. (2023). The role of financial development in enhancing trades in environmental goods: International insights from 119 countries. Journal of Commodity Markets. 29 (3). 10-20. https://doi.org/10.1016/j.jcomm.2022.100301.

31) Tian, M., Guo, F., and Niu, R. (2022). Risk spillover analysis of China's financial sectors based on a new GARCH copula quantile regression model. The North American Journal of Economics and Finance. 63 (11). 101 - 111. https://doi.org/10.1016/j.najef.2022.101817.

32) Uddin, M.R., Rashid, M.U., and Rahman, T. (2022). Profitability, marketability, and CSR disclosure efficiency of the banking industry in Bangladesh. Journal Heliyon. 8 (11). 119 - 129. https://doi.org/10.1016/j.heliyon.2022.e11904.

33) Urlich, S.C., White, F.R., and Rennie, H.G. (2022). Characterizing the regulatory seascape in Aotearoa New Zealand: Bridging local, regional and national scales for marine ecosystem-based management. Journal of Ocean & Coastal Management. 224 (6). 106 - 116. https://doi.org/10.1016/j.ocecoaman.2022.106193.

34) Walmsley, T., Rose, A., John, R., Wei, D., Hlavka, J.P., Machado, J., and Byrd, K. (2023). Macroeconomic consequences of the COVID-19 pandemic. Journal of Economic Modeling. 120 (3). 106 - 116. https://doi.org/10.1016/j.econmod.2022.106147.

35) Wang, Y., Lucey, B.M., Vigne, S.A., and Yarovaya, L. (2022). The Effects of Central Bank Digital Currencies News on Financial Markets. Journal of Technological Forecasting and Social Change. 180 (7). 121 – 131. https://doi.org/10.1016/j.techfore.2022.121715.

36) Wing Fong, T.P., Wan Sze, A.K., and Cheung Ho, E.H. (2022). Do long-term institutional investors contribute to financial stability? – Evidence from equity investment in Hong Kong and international markets. Journal of International Financial Markets, Institutions and Money. 77 (3). 152 - 162. https://doi.org/10.1016/j.intfin.2022.101521.

37) Yildirim, Z. (2022). Global financial risk, the risk-taking channel, and monetary policy in emerging markets. Journal of Economic Modeling. 116 (11). 106 - 116. https://doi.org/10.1016/j.econmod.2022.106042.

38) Zhan, S., Tang, Y., Li, S., Yao, Y., and Zhan, M. (2021). How does the money market development impact the bank lending channels of emerging countries? A case from China. The North American Journal of Economics and Finance. 57 (7). 138 - 149. https://doi.org/10.1016/j.najef.2021.101381.