Email: ijbe.
feubb@gmail.
http://ojs.
ijbe-research.
com/index.
php/IJBE/index Determinants of Technology Adoption and Financial Ratios on Banking Performance in Indonesia Through Net Interest Margin as Mediation Endah Suci Damayantia*.
Adler Haymans Manurunga.
Yayan Hendayanaa.
Wastam Wahyu Hidayata Universitas Bhayangkara Jakarta Raya endahsuci2505@gmail.
Abstract The purpose of this study is to explore the relationship between technology adoption, financial ratios that can affect banking performance in Indonesia through the mediation of Net Interest Margin.
The research approach is Explanatory Research with purposive sampling technique obtained 35 go pubic banks selected with 9 years of financial statement data from 2015 to 2023 so as to obtain 315 observations.
The research findings show that BOPO strongly influences the NIM variable, giving rise to direct and indirect effects.
All direct effects are the largest affecting ROA.
Company management must manage Technology Adoption.
NPL.
LDR.
Quality of Earning Assets (QEA) and BOPO to influence Banking Performance.
Company management must manage these ratios to provide high ROA so that investors are interested in buying banking stocks.
The efficiency of the company represented by BOPO needs to be managed so that NIM increases and can be limited to the maximum.
Article Info
A Received A Revised A Published A Pages A DOI
A JEL
A Keywords : 14th August 2025
: 30th September 2025
: 15th November 2025
: 520-540
: http://dx.
org/10.
33019/ijbe.
: G21.
O14.
L25
: Banking Performance.
Technology Adoption.
NIM.
NPL.
LDR.
BOPO.
Asset Quality This work is licensed under a Creative Commons Attribution 4.
0 International License Introduction Banks function as financial institutions that carry out activities to collect funds, channel them back to the community in order to improve people's lives (Sarmigi & Putra, 2.
and (Prananda et al.
, 2.
Banks must be able to maintain good financial performance, especially the level of profitability (Sagala et al.
, 2.
Profitability used is measured by Return on Asset (ROA).
The greater the ROA shows the better the bank's financial performance, because the greater the rate of return (Nuryanto et al.
, 2.
Payment of principal and interest on loans can directly reduce bank performance and cause banks to be inefficient (Febriani & Yuniarti, 2.
and (Guicheldy & Sukartaatmadja, 2.
The next factor is the Loan to Deposit Ratio (LDR), which is a financial ratio of banking companies related to liquidity aspects to measure the ratio between a bank's ability to extend credit to the public (Haq & Harto, 2.
and is based on the amount of credit extended to the public (Kasmir, 2.
Loan to Deposit Ratio (LDR) must be maintained at a level that is not too large to provide credit if it does not have solid financial support and will affect the costs that must be borne by the bank (Fadli, 2.
Return On Asset (ROA) is a ratio that describes the bank's ability to generate profits from total assets (Widhiati, 2.
The effect of e-banking technology adoption has a complex relationship with market share, customer behaviour and bank financial performance.
The use of e-banking technology .
uch as mobile banking applications, internet banking.
ATMs, etc.
can improve operational efficiency and employee productivity (Baker et al.
, 2.
The use of automation software can reduce errors and increase effectiveness in decision making (Dadoukis et al.
, 2.
has a positive impact on financial performance (Fraihat et al.
, 2.
The last factor is Operating Expenses to Operating Income (BOPO).
One of the ratios commonly used to measure the level of bank efficiency is the ratio of operating costs to operating income ( Rahmani, 2.
and (Syafrizal et al.
, 2023 .
Some previous studies still have different research results, such as the results of research Brastama and Yadnya .
mention CAR has a positive effect on ROA, the results of research from Liyana and Indrayani .
mention that CAR has an effect on ROA, but the results of research Ikhsan et al.
states that CAR has a positive and insignificant effect on ROA.
The results of research from Mulyaningsih and Hidajat .
state that KAP has an effect on ROA and KAP has a positive and insignificant effect on CAR.
The results of research from Liyana & Indrayani .
states that NIM has an effect on ROA.
Simbolon and Simanjuntak .
states that NPL and CAR have an effect on ROA.
Sukmadewi .
states that CAR.
NPL and NIM have an effect on ROA.
Arisma .
states that NPL and LDR have an effect on ROA.
Liyana and Indrayani .
mention that CAR mediates NPL on ROA, but CAR does not mediate NIM and LDR on ROA.
Widhiati, .
also states that KAP has an effect on ROA.
Findings Different research results from Brastama and Yadnya .
and Ikhsan et al.
states that NPL has a negative effect on ROA and Liyana and Indrayani .
states that NPL has no effect on ROA.
Hartini et .
states that CAR has no effect on ROA.
Liyana and Indrayani .
states that vThis work is licensed under a Creative Commons Attribution 4.
0 International License LDR has no effect on ROA and CAR and Lisa and Arinta .
states that KAP has no effect on ROA.
This study has novelty, namely the adoption of technology that is included as an independent variable has a different measurement from previous studies such as Simorangkir .
Second, the quality of earning assets is very limited as an independent variable.
Net Interest Margin as a mediating variable.
The existence of mediating variables makes this study contribute in seeing the direct and indirect effects on banking performance.
This study explores the relationship between technology adoption, financial ratios.
Net Interest Margin and is expected to provide a deeper understanding of the internal and external dynamics that affect banking performance in Indonesia as well as enrich the literature related to the role of technology in the financial sector and provide a theoretical basis for future studies related to banking performance.
Literature Review Financial Performance Good financial performance stability is an attraction for investors and creditors ( Ariyani and Putri,2.
and reflects the success of management in achieving strategic goals (Metyopandi et al.
, 2.
and Horo et al.
Financial performance measurement is the process of assessing the effectiveness of the organisation's operations that have been determined ( Dawu and Manane,2.
and (Cashmere .
This study only uses one type of ratio, namely the profitability ratio with Return On Asset (ROA).
Profitability ratio is the bank's ability to generate or earn profits effectively and efficiently (Niu & Wokas, 2.
The greater the ROA shows the better financial performance of the bank, because the greater the rate of return (Rohmandika et al.
, 2.
Profitability Theory The assessment of profitability is very crucial because it serves as the main indicator in measuring the company's financial performance.
To measure profitability, several financial ratios are used, including the net profit margin ratio.
Return On Assets (ROA) and Return On Equity (ROE) ((Pervan & Mlikota, 2.
and can measure the effectiveness of using assets and capital in generating income (Sasmiharti, 2.
Factors that affect profitability include revenue generated, operating costs, cost structure, and pricing policies applied by companies tend to have higher profit margins (Darkwah, 2.
Technology Adoption Technology adoption refers to a process in which individuals get to know, accept, and finally apply an innovation in decision making, either to accept or reject it (Rohmah et al.
, 2.
and explains behaviour in the use of technology (Ispriandina & Sutisna, 2.
to support user or consumer activities (Hidayat et al.
, 2.
The use of e-banking technology such as mobile banking applications, internet banking.
ATMs and other has a significant impact on customer (Salman, 2.
and innovation attracts customers from competing banks that focus less on technology (Sabila et al.
, 2.
Technology adoption has a significant influence on business financial performance and increases operational efficiency and vThis work is licensed under a Creative Commons Attribution 4.
0 International License employee productivity (Baker et al.
, 2.
and reduces errors, as well as increases the effectiveness of decision making (Dadoukis et al.
, 2.
and positively affects financial performance (Fraihat et al.
, 2.
The adoption of e-banking technology began using electronic banking services for customer financial activities (OJK, 2015.
Sumiyati et al.
2023: Mulianita & Triandi, 2.
) and reflects the strongest adoption rate (Mulianita & Triandi, 2019.
Purwanti, 2021.
Safitri et al.
, 2.
Non Performing Loan Non Performing Loan (NPL) is a rate of return on credit that shows the level of bad credit at the bank.
NPL is calculated by comparing Non-Current Financing to Total Financing (Nurhasanah & Maryono, 2.
According to Kasmir .
, one of the risks that arise due to the increasing complexity of banking activities is the increase in NPLs which reflect the inability of banks or the unwillingness of borrowers to fulfil their financial commitments, which can cause major financial impacts for banks (Khan et al.
, 2.
(Ozili, 2019.
and(Mohmad Napi et al.
, 2024.
Qi, 2.
(Mohmad Napi et al.
, 2024.
Qi, 2.
(Mohmad Napi et al.
, 2024.
Qi, 2.
(Mohmad Napi et al.
, 2024.
Qi, 2.
Therefore, continuous monitoring and management of NPLs is critical to maintain the stability and profitability of financial institutions in an evolving economic landscape (Kusuma et al.
, 2023.
Singh et al.
Net Interest Margin A higher NIM ratio reflects an increase in interest income on productive assets managed by the bank, so the risk of the bank experiencing problems tends to be smaller (Purwanti, 2.
NIM is used to assess the profitability and efficiency of banks in managing their financial assets (Angori et al.
, 2.
This difference is then expressed as a percentage of total productive assets (Endri et al.
, 2.
This efficiency is crucial to maintain profitability amidst intense competition in the banking industry, where margins tend to be thin (Homaidi et al.
, 2.
Banks with higher NIM tend to have better resilience to economic fluctuations Nugroho and Muharam .
, (Hanzlyk & Teply, 2.
as well as maximising income from core activities (Jayasena et al.
, 2.
in order to generate net interest income (Murdiyanto, 2.
Loan to Deposit Ratio Loan to Deposit Ratio (LDR) is a financial ratio that measures the liquidity aspect in the banking industry (Haq & Harto, 2.
Therefore, maintaining a balanced LDR is a top priority in bank liquidity management.
According to Fadli .
, the ideal LDR level should be achieved with prudence.
If banks are too aggressive in providing credit without solid funding support, liquidity risk may increase.
Conversely, if the LDR is too low, it will become a cost burden for the bank.
LDR is the ratio between the amount of credit provided and the amount of funding sources derived from public funds such as demand deposits, savings and time deposits (Rerung, 2.
Productive Asset Quality (KAP) The Earning Asset Quality (KAP) ratio is a key indicator of asset health that reflects how effectively banks manage their earning assets while mitigating the risk of customer default vThis work is licensed under a Creative Commons Attribution 4.
0 International License (Lisa & Arinta, 2.
A lower KAP ratio signals better financial performance because it indicates that fewer assets are classified as problematic (APYD), allowing the bank to maximize total earning assets and thereby increase revenue and profitability.
Effective management of this ratio not only strengthens a bankAos balance sheet through reduced provisioning needs but also enhances investor confidence, since asset quality is closely tied to profitability indicators such as Return on Assets (ROA).
Return on Equity (ROE), and ultimately market valuation through Price-to-Book Value (PBV).
Moreover, maintaining a healthy KAP ratio demonstrates prudent risk management and compliance with regulatory expectations, which is crucial for systemic stability in the banking sector.
In practice, banks can improve their KAP ratio by strengthening credit assessment, monitoring loan performance, and leveraging technological innovations such as big data and AI to detect early warning signals of default.
As global and domestic economic fluctuations continue to affect customer repayment capacity, proactive management of earning assets becomes essential for Thus, the KAP ratio is not merely a technical measure but a strategic indicator that influences operational decisions, investor perceptions, and long-term sustainability of banking performance.
Operating Expenses to Operating Income (BOPO) Increased competition requires banks to manage their business efficiently.
Efficiency is an important factor to maintain business.
Polii et al.
) revealed that efficiency is the relationship between inputs and outputs produced with the resources used to carry out operational activities.
Banks will be able to operate efficiently if the management of input and output operations is carried out properly (Daulay et al.
, 2.
According to Rahmani .
BOPO is used to measure the level of efficiency and ability of banks in supporting operational activities ( Luayyi et al.
(Astuti, 2.
and (Rufaidah et al.
, 2.
Hypothesis Development Technology adoption in financial institutions is becoming increasingly important to improve operational efficiency and ultimately impact financial performance metrics such as Net Interest Margin (Jayasena et al.
, 2.
According to the Technology Acceptance Model (TAM), adoption occurs when users perceive new technologies as useful and easy to use, which in the banking context translates into systems that simplify operations, enhance decision-making, and support strategic goals.
Extending this perspective, the Diffusion of Innovations (DOI) theory highlights that financial institutions adopting innovations such as big data analytics, automation, and digital banking gain competitive advantages by reducing operational costs and credit risk, which are critical components in determining NIM (Hariyanti et al.
, 2.
Moreover, with technology enabling more accurate credit assessments, real-time risk monitoring, and efficient fund management, banks can set competitive lending rates without compromising profitability.
Thus, integrating technology adoption theory helps explain why some financial institutions achieve stronger financial performance: successful adoption not only reflects managerial readiness and cultural openness to innovation but also creates measurable impacts on profitability, market positioning, and long-term sustainability.
H1 : Technology Adoption has a positive effect on NIM vThis work is licensed under a Creative Commons Attribution 4.
0 International License Non-performing loans (NPL.
are an important indicator of the credit risk faced by banks, representing the percentage of loans in the portfolio that are delinquent or in default (Asiama & Amoah, 2.
When NPL rates are high, banks are required to set aside more reserves in anticipation of losses, which in turn can reduce net interest income derived from interest (Lestari & Setianegara, 2.
This scenario can put pressure on Net Interest Margin (NIM) as banks cannot maximise interest income from their loan portfolio due to the presence of non-performing loans that do not generate interest (Asiama & Amoah, 2.
and (Pinasti & Mustikawati, 2.
H2 : NPL has a negative effect on NIM Loan to Deposit Ratio (LDR) is a key metric to evaluate the efficiency of banks in utilising funds from customers to generate interest income through lending activities (Hariyanti et al.
A high LDR may indicate that the bank is more aggressive in lending, thus potentially increasing interest income and Net Interest Margin (Hariyanti et al.
, 2.
However, this approach may lead to higher risk if loans are not managed effectively, which may negatively impact NIM (Hariyanti et al.
, 2.
In addition, a high LDR may indicate that banks are maximising the use of funds for financing, which could potentially increase profitability through a wider spread between lending rates and funding costs (Pinasti & Mustikawati, 2.
and (Lestari & Setianegara, 2.
H3 : LDR has a positive effect on NIM High-quality productive assets, such as loans that have low credit risk, tend to generate stable and reliable interest income, thus potentially increasing NIM (Saputra & Angriani, 2.
Conversely, the deteriorating quality of earning assets often requires more intensive risk management interventions, which increases the operational burden for banks (Susilawati & Nurulrahmatiah, 2.
and (Ishak et al.
, 2.
This relationship can be explained through the Earning Asset Quality (EAQ) theory, which emphasizes that the soundness of a bankAos asset portfolio is a primary determinant of its profitability and long-term stability.
According to this theory, banks with a higher proportion of classified earning assets (APYD) face greater credit risk, higher provisioning costs, and lower returns, while banks maintaining strong asset quality are better positioned to optimize resource allocation, reduce risk exposure, and achieve sustainable earnings.
In practice, maintaining healthy earning asset quality requires effective credit appraisal systems, continuous monitoring, and portfolio diversification to prevent concentration risks.
Thus, the EAQ theory underscores that profitability is not only a result of revenue generation but also of disciplined risk management and prudent asset allocation, making asset quality a central driver of both operational efficiency and financial H4 : Earning Asset Quality negatively affects NIM Operating expenses operating income is an important factor in influencing the financial performance of banks, which impacts metrics such as net interest margin (NIM) (Hanzlyk & Teply, 2.
However, if these costs increase without being offset by a proportional increase in interest income, it has the potential to reduce NIM by reducing net income from operating activities (Pinasti & Mustikawati, 2.
The level of operating expenses operating income can be an indicator of the strategic intentions of financial institutions, such as the expansion vThis work is licensed under a Creative Commons Attribution 4.
0 International License of market share or the introduction of new products that require extensive promotional efforts (Pratiwi & Wiagustini, 2.
H5 : BOPO has a negative effect on NIM By utilising these technologies, companies can not only reduce marketing costs but also increase campaign effectiveness and achieve economies of scale (Khin & Ho, 2.
This reduction in operating costs directly contributes to an increase in net income, subsequently improving the Return On Assets (ROA) metric, which measures a company's efficiency in generating profits from its assets (Khin & Ho, 2.
Advanced marketing technologies can enhance their ability to attract and retain customers and drive sales growth (Davenport et al.
Increased revenue can augment productivity and ultimately increase their ROA (Davenport et al.
, 2.
Therefore, the specific hypothesis that can be tested is whether the implementation of marketing technology significantly improves return on assets by increasing operational efficiency and optimising the use of assets within the firm.
H6 : Technology Adoption has a positive effect on Banking Performance The ratio of total loans to total assets .
oan rati.
is considered an indicator of liquidity.
Lestari et al.
, .
found a positive relationship between liquidity and profitability causing a negative effect on profitability (Pratama et al.
, 2.
However, high loan volume growth can also lead to a decrease in credit quality, which will reduce profitability.
(Rohmandika et , 2.
Hastuti and Ghozali .
examining banks in Portugal.
Spain.
France and Germany revealed a positive relationship between loan ratios and profitability.
(Fanny et al.
found that higher loan ratios negatively affect profitability and financial losses occur which have an impact on reducing bank performance (Rohmandika et al.
, 2.
H7 : NPL has a negative effect on Banking Performance Hamenda and Manengkey .
state that profitability growth is in line with credit growth, the more credit provided will generate greater interest income so that profitability will High liquid assets will have implications in reducing profitability (Pradnyaswari & Dana, 2.
The level of internal liquidity of the bank is one of the determinants of Research by Budhathoki and Rai .
has shown that one component of Loan to Deposit Ratio (LDR), can significantly affect the financial performance of banks.
High LDR levels, which indicate lower liquidity, have been associated with negative Return on Asset (ROA) and reduced liquid funds, thus affecting bank profitability ( Budhathoki & Rai.
H8 : LDR has a positive effect on Banking Performance High-quality earning assets, such as sound credit or profitable investments, are essential to ensure stable and reliable cash flows, which directly affect a company's net profit.
(Tegambwage & Kasoga, 2.
When net profit increases, so does the ROA to generate profit (Tegambwage & Kasoga, 2.
Conversely, a decline in the quality of earning assets and leads to an increase in costs, such as provisions for credit losses (Al-Homaidi et al.
, 2.
which ultimately negatively impacts the firm's financial performance and ROA (Al-Homaidi et al.
, 2.
Therefore, a specific hypothesis that can be tested is the negative effect of asset quality deterioration on Return on Assets, which is associated with an increased risk of loss vThis work is licensed under a Creative Commons Attribution 4.
0 International License and decreased earnings from the affected assets.
Research has shown that asset quality is closely related to a firm's profitability and financial performance (Kirimi et al.
, 2.
H9 : Earning Asset Quality has a positive effect on Banking Performance Operating expenses operating income is an important factor in the financial performance of the company, including costs associated with promotional activities, advertising campaigns, and other marketing efforts aimed at increasing sales and market share (Goodell, 2.
and increasing net profits can have a positive impact on ROA (Martiasih et al.
, 2.
Conversely, if operating expenses of operating income increase excessively without a corresponding increase in sales or revenue, it may lead to a decrease in net profit, thereby depressing ROA (Prihatin, 2.
, affecting financial performance (Kartika et al.
, 2023 and (Gautam & Bangshi, 2.
Operating costs, especially the ratio of operating expenses to operating income (BOPO), can significantly affect ROA (Astuti & Kabib, 2.
and there is a positive correlation between BOPO and ROA (Awalia et al.
, 2.
and (Febrianti & Setyowati, 2.
(Febrianti & Setyowati, 2.
H10 : BOPO has a negative effect on Banking Performance Net Interest Margin (NIM) shows the ability of bank management to manage its productive assets to generate net interest income.
The greater the NIM ratio, the higher the interest income on productive assets managed by the bank so that the possibility of a bank in problematic conditions is smaller (Saputra & Angriani, 2.
If the NIM ratio increases, banks will generate increased profits as well.
Indrawan and Dewi .
found that NIM has a significant positive effect on ROA.
Rina and Rofiuddin .
also stated that the higher the NIM, the greater the bank's profitability.
Rembet & Baramuli .
and Khabibah et al.
found that NIM has a positive effect on ROA and ROE.
H11: NIM has a positive effect on Banking Performance Studies by Brastama and Yadnya .
and Ikhsan et al.
show that NPL has a negative effect on ROA and can be mediated by other variables such as CAR, while Mulyaningsih and Hidajat .
confirmed a significant negative effect of NPL on ROA.
However, research by Sari et al.
actually found that NIM does not mediate the relationship between NPL and ROA, showing the inconsistency of NIM's role.
The gap in these studies is that they have not taken into account how technological efficiency and digital transformation can affect the relationship.
Therefore, this study re-examines the mediating role of NIM in a more modern context that is adaptive to credit risk arising from NPLs.
H12 : NPL mediated by NIM has a negative effect on Banking Performance Too high Loan to Deposit Ratio (LDR) without stable funding support increases liquidity risk and suppresses efficiency.
NIM acts as a transmission channel in linking the bank's intermediation strategy with financial results, because the interest margin reflects the real results of lending against interest costs.
Research by Liyana and Indrayani .
found that LDR does not significantly affect ROA directly and CAR as a mediator also does not mediate the LDR - ROA relationship.
Meanwhile.
Arisma.
states that LDR has a significant effect on ROA and Endri et al.
confirmed that LDR has an effect on NIM.
However, there is no study that specifically examines the role of NIM as a mediator of the relationship vThis work is licensed under a Creative Commons Attribution 4.
0 International License between LDR and ROA.
This research is here to bridge the gap, by highlighting the importance of optimising LDR that is managed efficiently through NIM, especially in the digital banking era that demands high efficiency and adaptive risk management.
H13 : LDR mediated by NIM has a positive effect on Banking Performance Earning Asset Quality (KAP) is an important indicator of a bank's effectiveness in managing its income-producing assets.
Low KAP indicates high quality earning assets, which minimise the risk of loss and support the stability of interest income.
Research by Mulyaningsih and Hidajat .
and Widhiati .
shows that KAP has a significant positive effect on ROA.
However, studies such as Khairiyah et al.
and Lisa and Arinta .
do not explicitly discuss NIM mediation.
Even Mulyaningsih and Hidajat.
mostly highlight the effect of KAP on CAR, without exploring the efficiency path of interest income through NIM.
Thus, there is a research gap to explore the mediating role of NIM as an important mechanism in linking asset quality and banking performance, which will be empirically tested in the context of digital system transformation and asset risk management.
H14 : Earning Asset Quality mediated by NIM has a positive effect on Banking Performance Operating Expenses to Operating Income (BOPO) is an indicator of bank operational Therefore.
Net Interest Margin (NIM) is a key point that represents the efficiency of banks in generating profits from intermediation activities.
Good BOPO efficiency increases the potential for NIM improvement and strengthens financial performance through Return on Assets (ROA).
Research Astuti.
and Sukmadewi .
show that BOPO has a significant negative effect on ROA and affects NIM simultaneously.
Dwitanto et al.
also supports that BOPO affects net interest margin.
However, there are not many studies that discuss the role of NIM as a mediator in the relationship between BOPO and ROA.
This gap indicates the need for research that evaluates how NIM as a result of interest efficiency can bridge the relationship between operating costs and profitability, especially in the era of digital transformation that should improve the overall operational efficiency of H15: BOPO mediated by NIM has a positive effect on Banking Performance Technology Adoption (X.
Non Performing Loan (X.
Loan to Deposit Ratio (X.
Quality of Earning Assets (X.
Operational Cost Operational Revenue (X.
Net Internest
Margin (M) H12
H11
H14
H13
H15
Return On Asset (Y) H10 Figure 1.
Conceptual Framework vThis work is licensed under a Creative Commons Attribution 4.
0 International License Research Methods The research approach used in this research is a quantitative approach and the type of research is Explanatory Research.
The population of this study are banks listed on the Indonesia Stock Exchange, which have published their complete financial statements for the period 20152023, be it government-owned, private or foreign banks.
Sample selection is used using purposive sampling method with banking criteria that have complete financial report publications every year and are listed on the IDX in 2015 - 2023.
There are 35 banks listed on the IDX according to the research limitation criteria and make it a population.
A number of members of the population also became research samples and were used as units of analysis, so the research was carried out by means of a census.
During the time span of 9 years of financial reports from 2015 to 2023, 315 data objects were obtained for observation.
This type of research data is secondary data in the form of financial reports and company annual reports obtained from the Indonesia Stock Exchange website , (Indonesian Capital Market Director.
, and w.
The data used in the study are time series and cross section data.
The data analysis technique uses the panel data regression analysis method to test the effect of the independent variable on the dependent variable.
The dependent variable in this study is Banking Performance, the independent variables are Technology Adoption.
Non Performing Loan (NPL).
Loan to Deposit Ratio (LDR).
Earning Asset Quality.
Operating Expenses Operating Income (BOPO), with the mediating variable is Net Interest Margin (NIM).
This research model is as follows:
ycAyaycAycn,yc = 0 1 ycNyaycn,yc 2 ycAycEyaycn,yc 3 yayaycIycn,yc 4 ycEyayaycn,yc 5 yaAycCycEycC yuAycn,yc ycIycCyaycn,yc = 0 1 ycNyaycn,yc 2 ycAycEyaycn,yc 3 yayaycIycn,yc 4 ycEyayaycn,yc 5 yaAycCycEycC 6 ycAyaycA yuAycn,yc ycIycCyaycn,yc = 0 1 ycAycAycEyaycn,yc 3 ycAyayaycIycn,yc 4 ycAycEyayaycn,yc 5 ycAycCyaycCycI yuAycn,yc Where:
ROA
NIM
NPL
LDR
QEA
BOPO
MNPL
MLDR
MQEA
MOCOR
= Return On Asset company i year t = Net Interest Margin of company i in year t = Non Performing Loan of company i in year t = Loan to Deposit Ratio of company i in year t = Quality of Earning Assets of company i in year t = Operational Cost Operational Revenue company i year t = Technology Adoption company i year t = NPL Mediation Variable = LDR Mediation Variable = QEA Mediation Variable = OCOR Mediation Variable = sample company .
= 1, 2, 3, 4 .
= year 2015-2023 = constant = slope = error component Results Descriptive Based on the results of descriptive analysis presented in Table.
1 illustrates that all variables in the study show normally distributed data.
Technology Adoption (X.
has an average of 4 vThis work is licensed under a Creative Commons Attribution 4.
0 International License with a standard deviation of 1.
The minimum value of 2 indicates that there are still banks that are low in technology adoption.
The Swekness value of 0.
9259134 shows that the distribution of Technology Adoption data tends to lean right, indicating that most banks have a relatively high level of Technology Adoption.
Non-performing loan (X.
has an average of 9543 with a standard deviation of 1.
The minimum value of 0.
0100 indicates that there are banks with a very low level of non-performing loans.
The maximum value of 9.
indicates that some banks experience high levels of NPLs.
Loan to Deposit Ratio (X.
has an average of 85.
0392 with a standard deviation of 24.
The minimum value of 29.
indicates that there are banks with a relatively low level of lending compared to the funds The maximum value of 390,1200 indicates that there are banks that have loan disbursements far exceeding the average.
Earning Asset Quality (X.
has an average of 2.
4268 with a standard deviation of 1.
The minimum value of 0.
0000 indicates that the bank may not have productive asset quality assets, while the maximum value of 8.
8400 in the year indicates that there are banks that have high quality assets.
Operating Expenses Operating Income (X.
has an average of 88.
with a standard deviation of 26.
The minimum value of 28,3000 indicates that the bank has the smallest cost among existing banks.
The maximum value of 261,1000 indicates that there is the highest value far from the average.
Return on Asset (Y) has an average of 2.
0745 with a standard deviation of 2.
The minimum value is 0.
0100 and the maximum value is 15.
8900, indicating considerable variation in profitability between banks.
Skewness of 2.
9604 indicates that the data distribution is skewed to the right and kurtosis of 11.
7721 indicates that the data is more pointed than the normal distribution.
Both of these indicate that there are some banks with much higher ROA than the majority of other banks.
Net Interest Margin (M) has an average of 4.
9758 with a standard deviation of 2.
The minimum value of 0.
2200 indicates that there are banks that have very low interest margins.
The maximum value of 18.
3900 indicates that there are banks that are able to obtain a very high net interest margin.
Skewness of 1.
8998 indicates that the data distribution is skewed to the right, while kurtosis of 8.
4603 indicates that the data variation is very high.
Table.
1 Descriptive Statistics of Research Variables Minimum
Maximum
Average Standard Deviation Skewness Kurtosis Jarque Bera
NPL
LDR
QEA
BOPO
ROA
NIM
Source: Research data, processed .
Panel Data Regression Results vThis work is licensed under a Creative Commons Attribution 4.
0 International License The Chow test results show that the FEM model is better to use.
Furthermore, the Hausman Test results also obtained a probability value smaller than 0.
05 indicating that FEM is more appropriate, while if it is greater than 0.
05, then REM is better to use.
The correlation coefficient value between variables has a range from -0.
3468 to 0.
This correlation coefficient value also states that there is no correlation coefficient that falls into the strong This means that the regression model used in this research model is assumed to have no multicollinearity and this is fulfilled for further analysis.
Based on the data in Table 2.
it can be seen the direct effect of independent variables on ROA and PBV variables.
In ROA, it is shown that all independent variables show that the direct effect is greater than the indirect effect.
There is something quite interesting in the Earning Asset Quality (KAP) variable that the direct effect is positive and the indirect effect is While the non-independent variable PBV gives quite diverse results, there is a greater direct effect and there is also a greater indirect effect.
On the variables of Technology Adoption.
Non Performing Loan (NPL) and Loan to Deposits Ratio (LDR) that the indirect effect is greater than the direct effect.
The independent variables of KAP.
BOPO and Risk have a greater direct effect than the indirect effect.
In the ROA model, policy makers do not need to pay attention to indirect effects because there is not much influence.
While in PBV, policy makers need to pay attention to the indirect effects of Technology Adoption.
Non Performing Loan (NPL) and Loan to Deposits Ratio (LDR), while the KAP.
BOPO and Risk variables do not need to pay attention to indirect effects.
Variable Related with ROA
Net Interest Margin
Technology Adoption
BOPO
LDR
QEA
NPL
Table 2.
Direct and Indirect Effects Direct Indirect Total Source: Processed by the author .
Discussion The ROA model is one of the models for banking performance and this ratio is a fundamental bank ratio to analyse bank performance.
This study found that Technology Adoption significantly affects ROA.
In this study, the measurement of Technology Adoption used is a new measurement, namely the many technological features offered by banks to customers in improving services and bank customers.
This study states that the measurement of Technology Adoption is somewhat different from previous research, where Raharjo, .
uses the amount of costs incurred for technology in order to serve its customers.
Bank management must pay attention to the Technology Adoption used by the bank concerned.
The use of technology is increasingly in demand by bank customers, so bank management must improve the technological features used in serving its customers.
Another finding in vThis work is licensed under a Creative Commons Attribution 4.
0 International License this study is that BOPO affects ROA with a significant negative relationship.
This result states that an increase in BOPO will result in a decrease in ROA.
This result also states that an increase in BOPO does not directly increase ROA because BOPO provides the concept that Operating Expenses are divided by Operating Income.
The increase in BOPO depends on the increase in operating costs and operating income remains or decreases.
Therefore, bank management must reduce operating costs or increase operating income.
It is very interesting that bank management must pay attention to or manage BOPO in increasing the Bank's ROA.
This research supports previous research, namely (Daulay et al.
, 2022.
Feinberg and Zanardi.
Polii et al.
, 2020.
Sunarmie, 2.
This study also found that the LDR ratio negatively affects ROA.
The increase in LDR can be done by increasing the Loan and Deposit which is fixed or proportionally up or down.
increase in LDR will make a small ROA.
Therefore.
ROA can increase if bank managers manage Loans and Third Party Funds for the benefit of ROA.
This research supports previous research (Manurung and Kartika, 2020.
Kartika et al.
, 2023.
Manurung et al.
, 2020.
Wirawan et al.
, 2.
NIM has a positive effect on ROA.
NIM increase will increase ROA.
Therefore, bank management must manage the NIM so that ROA increases and improves the performance of the bank concerned.
NIM management starts with the amount of NIM that the bank must charge to its customers and good customer selection is very necessary so that NIM can really be accepted by the bank.
This research supports previous research, namely (Angori et al.
, 2019.
Baqir et al.
, 2023.
Endri et al.
, 2020.
Purwanti, 2021.
Sukmadewi, 2.
From a broader perspective, these findings reinforce the concept of profitability as the bankAos ability to generate earnings relative to its assets, equity, and resources.
Profitability ratios such as ROA and NIM are not only indicators of operational success but also serve as benchmarks for managerial efficiency, investor confidence, and long-term sustainability.
Therefore, careful management of lending, deposits, and interest margins is essential for enhancing overall profitability and securing competitive advantage in the banking sector.
The effect of NPL on ROA is negative.
If NPL increases.
ROA decreases.
NPL management is very important for Bank management in order to improve Bank performance.
Selection of customers who are willing to pay credit and do good business so that loans to banks are Bank management must pay close attention to bank customers to get small NPLs.
This study supports previous research (Harris et al.
, 2018.
Napi et al.
, 2024.
Ozili, 2019b.
Qi, 2.
Conclusion and Suggestion This study found that the correlation between variables is very weak, indicating minimal The BOPO variable has the strongest influence on NIM, which in turn shows both direct and indirect effects on banking performance.
For ROA, direct effects are dominant, with LDR and Earning Asset Quality emerging as significant variables in both the ROA and PBV models.
These findings imply that banks must improve efficiency, manage loan quality, and optimize liquidity to enhance profitability and market value.
For investors, attention to these key ratios offers valuable signals in stock selection, while for policymakers the results underscore the importance of promoting technological adoption and prudent risk management to strengthen the banking sector.
Future research should broaden the scope by vThis work is licensed under a Creative Commons Attribution 4.
0 International License including non-listed banks and exploring additional mediating variables to capture the complexity of banking performance.
Reference