THE EFFECT OF INCOME DIVERSIFICATION AND PROFITABILITY ON THE FINANCIAL STABILITY OF BANKS IN INDONESIA FOR THE PERIOD 2019-2023

Abstract

This study aims to analyze the effect of Revenue Diversification and Profitability on Bank Financial Stability using panel data from Conventional Banks listed on the Indonesia Stock Exchange and Regional Development Banks listed on ASBANDA. The sample collection technique used in this study is Purposive Sampling. Based on the sampling collection technique that has been determined, the amount of data is 235 data that has been transformed and outliers with the observation period 2019-2023 to eliminate extreme data to qualify for the normality test. The data analysis technique used is Panel Data Regression Analysis. In this study, Revenue Diversification is measured using Fee-Based Income (FBI), Profitability is measured using Return On Assets (ROA) and Bank Financial Stability is measured using (ZScore). The results of the study showed that Income Diversification has a negative and significant effect on Bank Financial Stability, while Profitability has a positive and significant effect on Bank Financial Stability.