Business Risk Momed in Banking Companies Listed On The Indonesia Stock Exchange With Digital Transformation on Financial Perfomance

Muhammad Razif; Erni Masdupi

doi:10.58526/jsret.v5i1.1049

Authors

Muhammad Razif Universitas Negeri Padang
Erni Masdupi Universitas Negeri Padang

DOI:

https://doi.org/10.58526/jsret.v5i1.1049

Keywords:

Digital Transformation, Financial Performance, Business Risk, Bank

Abstract

This study aims to analyze the impact of digital transformation on the financial performance of banking companies listed on the Indonesia Stock Exchange (IDX) from 2019 to 2023, with business risk as a mediator and moderator. A descriptive quantitative survey was implemented to collect data from annual reports of 229 banking companies. The data analysis utilized Structural Equation Modeling (SEM) with SmartPLS. The findings reveal that digital transformation positively influences financial performance, with business risk playing a significant mediating role in the relationship between digital transformation and financial performance. However, business risk did not moderate the effect of digital transformation on financial performance, as no significant interaction was found. These results emphasize the importance of managing business risk as a mediator to enhance the effectiveness of digital transformation in improving financial performance in the banking sector.

Downloads

Download data is not yet available.

References

Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182. https://doi.org/10.1037/0022-3514.51.6.1173

Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. (2013). Digital business strategy: Toward a next generation of insights. MIS Quarterly, 37(2), 471-482. https://doi.org/10.25300/MISQ/2013/37:2.3

Brigham, E. F., & Houston, J. F. (2014). Fundamentals of financial management (14th ed.). Cengage Learning.

Creswell, J. W. (2012). Educational research: Planning, conducting, and evaluating quantitative and qualitative research. Pearson Education.

Davenport, T. H., & Ronanki, R. (2018). Artificial intelligence for the real world. Harvard Business Review, 96(1), 108-116. https://hbr.org/2018/01/artificial-intelligence-for-the-real-world

Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319-340. https://doi.org/10.2307/249008

Gomber, P., Kauffman, R. J., Parker, C., & Weber, B. W. (2017). On the fintech revolution: Interpreting the forces of innovation, disruption, and transformation in financial services. Journal of Management Information Systems, 35(1), 220-265. https://doi.org/10.1080/07421222.2018.1440766

Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis (7th ed.). Pearson Education.

Hayes, A. F. (2018). Introduction to mediation, moderation, and conditional process analysis: A regression-based approach (2nd ed.). Guilford Press.

Jain, V., Sharma, P., Kumar, A., & Kansal, A. (2020). Digital banking: A case study of India. Solid State Technology, 63(6), 19980-19988.

Li, F., et al. (2019). Role of digitalization in the banking sector: Enhancing financial performance and customer service. International Journal of Digital Banking, 3(2), 56-67.

OJK (2023). Annual report on the performance of banking institutions in Indonesia. Financial Services Authority of Indonesia.

Preacher, K. J., & Hayes, A. F. (2004). SPSS and SAS procedures for estimating indirect effects in simple mediation models. Behavior Research Methods, Instruments, & Computers, 36(4), 717-731. https://doi.org/10.3758/BF03206553

Saeed, S., Altamimi, S.A., Alkayyal, N.A., Alshehri, E., & Alabbad, D.A. (2023). Digital transformation and cybersecurity challenges for businesses resilience: Issues and recommendations. Sensors, 23(15), 6666. https://doi.org/10.3390/s23156666

Westerman, G., Bonnet, D., & McAfee, A. (2012). The digital advantage: How digital leaders outperform their peers in every industry. MIT Sloan Management Review, 54(2), 1-9.