Profitability: Third Party Funds and Credit Risk Study on Indonesian Digital Banking

  • Raden Bagus Faizal Irany Sidharta
  • Rini Anggriani Universitas Bumigora
  • Isra Dewi Kuntary Ibrahim Universitas Bumigora
  • Noni Kezia Marchyta Universitas Kristen Petra
Keywords: credit risk, profitability, third party funds


With advances in technological development, people’s needs for fast and readily available services are on the rise. Therefore, many conventional banks started to develop their own brand of digital banking to accommodate these needs. This research is aimed to analyze the effect of third party funds (TPF) toward profitability and credit risk, effect of credit risk toward profitability, and indirect effect of third party funds toward profitability through credit risk by using path analysis method. This research shows that TPF do have a significantly negative effect toward credit risk and similar result of TPF toward profitability, a positive but insignificant effect of credit risk toward profitability, and lastly, TPF shows a direct effect toward profitability, which means that credit risk functioned as a partial mediation effect between TPF and profitability.


Herry achmad Buchory.2021.Analysis of funding strategy, Credit performance, and banking profitability (Case study of CIMB-NIAGA Bank In Indonesia). Journal Estudios de Economica Aplicada. Vol.39-4
Dendawijaya, Lukman. 2003. Manajemen Perbankan. Ghalia Indonesia. Jakarta.
Kuncoro, Mudjarad., & Suhardjono. 2002. Manajemen Perbankan: Teori dan Aplikasi. BPFE. Jakarta
Yunita, Patria.2021.The Digital Banking Profitability Challenges: Are They Different Between Conventional and Islamic Banks ? Jurnal Akuntansi dan Keuangan Vol.18 Issue 1
Boahene, et al.2012. Credit risk and profitability of selected bank in Ghana. Research Journal of Finance and Accounting. Vol.3 No.7
Frame W.S & White, L.J.2002.Empirical Studies of financial innovation:lots of talk, little action?. Working paper bank of Atlanta. 2002-12
Hamdi Helmi, Harun Can.2020.The Interactional Relationship Between Credit risk, Liquidity Risk, and Bank Profitability in MENA Region. Global Business Review Journal. Vol 1, No.23
Hermuningsih S.2019. Third Party Funds and Indonesia’s Sharia Banking Profitability with revenue sharing as intervening variable. East African Scholars Journal of Economics, Business and Management Vol.2 No.4
Nitasari & Nursuci Murni.2016.Analysis of the effect of third party fund, capital adequacy ratio, and loan to deposit ratio on bank’s profitability after the application of IFRS. The Indonesian Accounting Review Vol.6 No1.
Mairani S & Patrisia D.2020.Third Party Funds Analysis Towards Bank Risk in The Banking Industry in Indonesia Stock Exchange. Proceeding of The Sixth Padang International Conference on Economics Education, Economics, Business and Management, Accounting and Entrepreneurship
Jorion, P & Zhang G.2009. Credit Contagion from Counterparty Risk. The Journal of Finance.Vol.64, No.5
Yousof A & Felfodi.2018.The Effect Credit Risk Management on Profitability : An Empirical Study of Private Banks In Syria. Oradea Journal of Business and Economics. Vol 3. No. 2
Rahmanullah.2021.The Effects of Credit Risk on the Profitability of Commercial Banks in Afghanistan. Journal of Asian Finance, Economics, and Business.Vol.8 No.7
Romdhoni, Abdul Haris., & Yozika, Ferlangga El. 2018. Pengaruh Pembiayaan Mudharabah, Musyarakah Dan Ijarah Terhadap Profitabilitas Bank Muamalat Indonesia. Jurnal Ilmiah Ekonomi Islam, 4(03), p. 177– 186.
Kustina Branchless banking, Third Party Funds, and Profitability Evidence Reference to Banking Sector in Indonesia. Journal adv Research in Dynamical & Control Systems, Vol.11 No.2
Kasmir. (2014). Bank dan Lembaga Keuangan Lainnya, Edisi Revisi. Jakarta: Raja Grafindo Persada.
Sondakh et al (2021) The Effect of Third-Party Funds, Credit Risk, Market Risk, and Operational Risk on Profitability in Banking for Period 2014-2017. Munich Personal RePrec Archive
Sinaga et al (2020). The Effect BI Rate, Exchange Rate, Inflation and Third Party Funds (DPK) on credit distribution and its impact on Non Performing Loan (NPL) on XYZ Commercial Segment Bank. Universal Journal of Accounting and Finance Vol.8 No.3