Ari Christianti_abstract_1532011

DIVERSIFIKASI KREDIT TERHADAP PROFITABILITAS DAN PROBABILITAS KEGAGALAN BANK

Ari Christianti
Jurusan Manajemen Fakultas Bisnis Universitas Kristen Duta Wacana
Jl. Dr. Wahidin S. No. 05-25 Yogyakarta, 55224

Telp. + 62 274  563 929; Faks.  +62 274 513235
E-mail: ari@ukdw.ac.id

Abstract
Loan diversification in the banking industry was an interesting topic to be studied. Unlike previous research, this study not only examined the effect of loan diversification on profitability but also on the probability of default. Using panel data from banks listed on Indonesia Stock Exchange in 2004-2008 with FEM (fixed effect model) approach and weighting: cross section weight procedures, the results supported previous research that a high risk decreased the relationship between the diversification of loan and the profitability. However, the relationship between the diversification of loan and a probability of default decreased even when a high risk. The arguments for explaining this finding was that the probability of default was not an absolute measurement that described an actual probability of default. In addition, this invention in banking practices related with the write-off action that could minimize the credit risk (NPL) so that the probability of default decreased especially for private banks.

Key words: loan diversification, profitability, risk, probability of default

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