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Research Paper | Business Management | Indonesia | Volume 8 Issue 1, January 2019

Credit Risk as an Intervening Variable in the Effect of Good Corporate Governance (GCG) Implementation on Banking Companies Performance (Study on Banking Companies Listing on BEI 2012-2016 Period)

I Made Gilang Candra Pradipta Rata | Ni Ketut Surasni ^[3] | I Nyoman Nugraha AP

Abstract: The phenomenon of economic crisis that occurred in 1997-1998 has led Indonesia to the worst financial crisis and banking performance. Several factors contributed to the Indonesia economic collapse such as extremely poor financial regulation, irregular banking practices were pervasive and high default loans ratio of the state banks. Inadequate enforcement of central bank regulations meant that rules were routinely violated with impunity. Some efforts have been made to improve banking sector performance and regain public trust, the implementation of corporate governance practices in banking industry being the main concerned of central bank. As for the purpose of this study was to determine whether GCG had an effect on banking performance through credit risk. The object was several banks which listed on IDX and participated in IICG survey during 2012-2016. By using purposive sampling, 7 bank samples were obtained and the statistic analysis was carried out using Path Analysis Method. The results of this study indicate: 1) GCG has negative effect on credit risk, 2) GCG has positive impact on company performance, 3) credit risk has negative impact on company performance and 4) credit risk was able being referred as an intervening variable in the effect of GCG on banking companies performance. The results of this study can be used as a tool for improving company management related to GCG implementation, credit risk and company performance

Keywords: bank, GCG, NPL, ROE

Edition: Volume 8 Issue 1, January 2019,

Pages: 1435 - 1441

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