The Effect of Income Diversification, Bank Size, and Deposit to Total Assets on Bank Stability in Indonesia (Ekopedia Jurnal Ilmiah Ekonomi)

Summary

• The study covers banks listed on the Indonesia Stock Exchange during 2020-2024, with 43 banks and 215 observations.p.1
• Income diversification has a negative and significant effect on bank stability.p.1
• Bank size has a positive and significant effect on bank stability.p.1
• The deposit to total assets ratio has a negative but insignificant effect on bank stability.p.1
• The three variables together significantly affect bank stability, with an R-squared of 0.922481.p.1
• The income diversification coefficient is -3.289334 with significance of 0.0359.p.14

Key insights

1. The benefit of income diversification depends on the bank's ability to manage risk effectively.p.1
2. The bank size coefficient is 1.081113 with significance of 0.0004, so hypothesis H2 is accepted.p.14
3. The deposit to total assets coefficient is -0.433968 with significance of 0.3960, indicating no significant effect.p.14
4. The study population was 47 banks listed on the Indonesia Stock Exchange.p.9
5. Non-interest activities can add operational and market risk and complexity, which may explain the negative effect of diversification.p.15