The Effect of Credit Risk, Liquidity Risk, and Bank Capital on Bank Profitability During the COVID-19

Jessica Lilia Chandra, Elizabeth Lucky Maretha


This research aims to examine the impact of credit risk, liquidity risk, and bank capital on profitability banks in Indonesia and Malaysia during the global economic crisis of Covid-19 using panel regression analysis methods by E-views software. The research sample was 232 observational data for Indonesian banking and 64 observational data for Malaysian banking that were gained with purposive sampling method from 2020-2021 quarterly. The results of this study: are credit risk has a significant and negative impact on the profitability of Indonesian banks but has no effect on the profitability of Malaysian banks; liquidity risk has a significant and positive impact on the profitability of Indonesian banks but has no effect on the profitability of Malaysian banks; and bank capital does not affect the profitability of Indonesian and Malaysian banks.


banking profitability; bank capital; credit risk; covid-19; liquidity risk

Full Text:



Abbas, F., Iqbal, S., & Aziz, B. (2019). The Impact Of Bank Capital, Bank Liquidity And Credit Risk On Profitability In Postcrisis Period:‎ A

Comparative Study of US and Asia. Cogent Economics and Finance, 7(1).

Abdelaziz, H., Rim, B., & Helmi, H. (2022). The Interactional Relationships Between Credit Risk, Liquidity Risk and Bank Profitability in MENA

Region. Global Business Review, 23(3), 561–583.

Adelopo, I., Lloydking, R., & Tauringana, V. (2018). Determinants of bank profitability before, during, and after the financial crisis. International

Journal of Managerial Finance, 14(4), 378–398.

Ali, L., & Dhiman, S. (2017). The Impact of Credit Risk Management on Profitability of Public Sector Commercial Banks in India. Journal of

Commerce and Accounting Research, 8(2), 86–92.

Andrianto, Fatihudin, D; Frimansyah., M. A. (2019). Manajemen Bank. (January), 1–456. Retrieved from

http/ accesed on 27-01-2023.

Banna, H., & Alam, M. (2021). Impact of digital financial inclusion on ASEAN banking stability: implications for the post-Covid-19 era. Studies in

Economics and Finance. 38(2), 504–523. Retrieved from accesed on 27-01-2023.

Fadli, R. (2021). Begini Kronologi Lengkap Virus Corona Masuk Indonesia. Retrieved May 28, 2022, from accesed on 27-01-2023.

Karim, M. R., Shetu, S. A., & Razia, S. (2021). COVID-19, liquidity And Financial Health: Empirical Evidence From South Asian Economy. Asian

Journal of Economics and Banking, 5(3), 307–323.

Karim, S., Akhtar, M. U., Tashfeen, R., Raza Rabbani, M., Rahman, A. A. A., & AlAbbas, A. (2021). Sustainable banking regulations pre and during

coronavirus outbreak: the moderating role of financial stability. Economic Research-Ekonomska Istrazivanja , 1–18.

Katusiime, L. (2021). COVID 19 and Bank Profitability in Low Income Countries: The Case of Uganda. Journal of Risk and Financial Management,

(12), 588.

Khalid, M. S., & Hossain, A. (2019). The Impact of Liquidity Risk on Banking Performance : Evidence From Emerging Market. Global Journal of

Management and Business Research, 19(4), 47–52. Retrieved from

g_Market accesed on 27-01-2023.

Laato, S., Islam, A. K. M. N., Farooq, A., & Dhir, A. (2020). Unusual purchasing behavior during the early stages of the COVID-19 pandemic: The

stimulus-organism-response approach. Journal of Retailing and Consumer Services, 57(March), 102224.

Laeven, L. A., & Valencia, F. V. (2021). Systemic Banking Crises Database: An Update. In SSRN Electronic Journal.

Madugu, A. H., Ibrahim, M., & Amoah, J. O. (2020). Differential Effects Of Credit Risk And Capital Adequacy Ratio On Profitability Of The Domestic

Banking Sector In Ghana. Transnational Corporations Review, 12(1), 37–52.

Mateev, M., Tariq, M. U., & Sahyouni, A. (2021). Competition, capital growth and risk-taking in emerging markets: Policy implications for banking

sector stability during COVID-19 pandemic. In PLoS ONE (Vol. 16).

Peraturan OJK Nomor15/POJK.03/2017 Tentang Status Dan Tindak Lanjut Pengawasan Bank Umum.

Peraturan OJK Nomor 42 /POJK.03/2015 tentang Kewajiban Pemenuhan Rasio Kecukupan Likuiditas (Liquidity Coverage Ratio) bagi Bank Umum.

Pinasti, W. F., & Mustikawati, R. I. (2018). Pengaruh Car, Bopo, Npl, Nim Dan Ldr Terhadap Profitabilitas Bank Umum Periode 2011-2015. Nominal,

Barometer Riset Akuntansi Dan Manajemen, 7(1).

Pintor, S. (2022). The Effect of Financial Risk , Capital Structure , Banking Liquidity on Profitability : Operational Efficiency as Intervening Variables

in Persero Bank and Private Commercial Banks. 5(1), 226–234.

Pramitasari, T. (2020). Comparative Analysis Of The Biggest Banking Performance In Indonesia.

Prasetyo, P. P., Pantas, P. E., Ashar, N. J., & Pertiwi, F. R. (2020). Performance Comparison of Islamic Banking in Indonesia and Malaysia Islamicity

Performance Index Approach. Journal of Islamic Economics Perspectives, 2(1), 92–103.

Rahmi, Y., & Sumirat, E. (2021). A study of the impact of alma to profitability during the covid-19 pandemic. International Journal of Business

Economics and Law, 24(3), 54–65. Retrieved from

Rossi, S., Borroni, M., Lippi, A., & Piva, M. (2018). Determinants of Bank Profitability in the Euro Area: What Has Changed During the Recent

Financial Crisis? International Business Research, 11(5), 18.

Saleh, I., & Abu Afifa, M. (2020). The Effect Of Credit Risk, Liquidity Risk And Bank Capital On Bank Profitability: Evidence From An Emerging

Market. Cogent Economics and Finance, 8(1).

Samryn. (2022). Perbandingan Pengaruh Arus Kas dari Aktivitas Investasi terhadap Rasio Kecukupan Modal Bank Umum Indonesia dan Malaysia.

(1), 57–71.

Sari, S. P. (2022). Impact of Credit Risk, Distribution of Interest Rate, and Liquidity on Bank Profitability. Li Falah: Jurnal Studi Ekonomi Dan Bisnis

Islam, 6(2), 97.

Sayadi, M. H., & Sari, R. (2021). The Capital Market Performance Analysis in 5 ASEAN Countries during The COVID-19 Pandemic. Ijisrt.Com, 6(5).

Retrieved from

Susilawati, S., Falefi, R., & Purwoko, A. (2020). Impact of COVID-19’s Pandemic on the Economy of Indonesia. Budapest International Research

and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 3(2), 1147–1156.

Xin, L. (2020). Rising from the pandemic. In Physics World (Vol. 33).



  • There are currently no refbacks.

Copyright (c) 2024 Journal of Management and Business Environment (JMBE)

View My Stats | Journal of Management and Business Environment (JMBE) | e-ISSN: 2685-5992