Citation:

Safitri, Rio Dhani Laksana, Ekaningtyas Widiastuti. "Competition Level and Bank Specific Variables: The Impact on Banking Credit Risk" International Research Journal of Economics and Management Studies, Vol. 2, No. 3, pp. 598-604, 2023.

Abstract:

This research analysed the impact of competition level and bank-specific variables on banking credit risk with moderating variable using interest rates. Financial statements of conventional and Sharia commercial banks in 2016-2021 were used as the data panel. The total sample were 92 banks which were obtained during 6 years of observation using purposive sampling method. The results indicated that: (1) The competition level has a negative impact on credit risk, (2) Efficiency has no impact on credit risk, (3) Profitability has no impact on credit risk, and the level of competition has a negative impact on credit risk. (4) Bank size has no bearing on loan risk, (5) Loan ratios have a favorable impact on credit risk, (6) Interest rates mitigate the impact of credit risk competition, (7) Interest rates do not moderate the influence efficiency on credit risk; (8) Interest rates do not reduce how profitable a business is in relation to credit risk. (9) Interest rates do not mitigate the impact of a bank's size on credit risk, (10) Interest rates do not moderate the influence loan ratios on credit risk. This study implies that for mitigating the credit risk, it is better for banks to control the competition level and bank owned loan ratios as well as to pay more attention to the interest rate issued by Bank Indonesia.

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Keywords:

Bank Specific Variables, Competition, Credit Risk, Interest Rate.