Liquidity Creation and Profitability of Conventional Bank in Indonesia Fransisca Rahman and Dewi Hanggraeni
Faculty of Economics and Business, Universitas Indonesia
Abstract
This study conducted to measure the liquidity creation of conventional banks in Indonesia and analyze the effect of liquidity creation on bank profitability (ROA and ROE), including liquidity creation during the Covid-19 pandemic. The research sample is 40 conventional banks in Indonesia. This study includes control variables, both macroeconomic and bank characteristics, with quantitative research methods. The results show that liquidity creation has a positive and significant effect on profitability ROA in typical and crisis conditions (Covid-19 Pandemic). In more detail, we find that the liability side and off-balance sheet side is positively correlated to ROA, while the assets side is insignificantly related to ROA.
Keywords: liquidity creation, profitability, Return On Asset, Return On Equity
