HOW CORPORATE GOVERNANCE, CREDIT RISK AND PERFORMANCE LINK TOGETHER?
AbstractAbstractPurpose:In this study, a research was conducted to compare Â link corporate governance, credit risk, and performance on conventional banking and islamic banking in Indonesia.Methodology:This research used quantitative method with Generalized Structured Component Analysis (GSCA) for testing and analzing. In this study using conventional and sharia banking data in Indonesia for the period 2012-2016 which are listed on the Indonesia Stock Exchange and the Indonesian Financial Services Authorit.FindingThe result of Â research showed that on the conventional banking, profitability is influenced by the link together of corporate governance, liquidity and credit risk, while on the islamic banking, profitability is influenced by the link together Â of liquidity and credit risk.Practical Implication:First, the existence and number of the Board of Commissioners and Audit Committee in conventional banking are able to support the achievement of performance. This should be maintained and improved.Second, supervision is needed to manage distributing of sharia financing. Islamic banking has two indicators that play a role in the formation of credit risk which have the potential to reduce liquidity and profitability.Third, it is necessary to trade-off for the management of islamic banking in managing their liquidity because the increase in liquidity has the potential to reduce profitability.Novelty:The first study comparing the linkage between corporate governance, credit risk and performance in conventional and islamic banking in Indonesia using GSCA.Â Keywords: corporate governance, credit risk, performance
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