Evaluation of Asset and Liability Management Strategies on Financial Stability in Indonesian Listed Banks: Moderating Effects of Bank Characteristics
DOI:
https://doi.org/10.23960/E3J/v9.i1.33-40Keywords:
Strategic Management, Financial Management, Liquidity Coverage Ratio, Financial Stability, Asset and Liability ManagementAbstract
This research investigates how the Liquidity Coverage Ratio (LCR) influences the financial stability of banks listed on the Indonesian stock exchange, considering the moderating roles of Net Interest Margin (NIM), Capital Adequacy Ratio (CAR), bank size, and asset growth. This study utilizes secondary data from the annual reports of 27 conventional banks listed on the Indonesia Stock Exchange, covering the period 2020–2024, this research employs a quantitative causal-comparative approach with multiple linear regression and robust standard errors in STATA. Financial stability is measured using the Z-Score, while LCR represents short-term liquidity. The results indicate that the direct effect of LCR on financial stability is significant but negative, suggesting that excessive liquidity may reduce profitability and weaken stability. However, when moderated by CAR, bank size, and asset growth, LCR positively and significantly influences financial stability, highlighting the importance of internal bank characteristics in enhancing resilience. In contrast, NIM does not significantly strengthen the effect of LCR on stability, implying that profitability alone may not optimize the impact of liquidity. Overall, the study demonstrates that the effectiveness of liquidity in maintaining bank stability depends on the bank’s internal conditions, including capital adequacy, size, and asset growth, while the role of profitability remains limited. These findings provide insights for bank managers and regulators on the strategic management of liquidity and internal resources to support sustainable financial stability, particularly in post pandemic conditions and under global economic uncertainties.
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