Determinants of Banking Return on Assets in Indonesia: An Analysis of Aggregate Fintech Expansion, Electronic Transaction Intensity, and Non-Performing Asset Ratio
Keywords:
Return on Assets, Fintech Expansion, Electronic Transactions, Non-Performing Assets, Bank ProfitabilityAbstract
Purpose – This study aims to empirically examine the impact of aggregate financial technology (fintech) expansion, electronic transaction intensity, and non-performing asset ratio on bank profitability, proxied by Return on Assets (ROA).
Design/methodology/approach – A quantitative approach is employed using panel data multiple linear regression. The sample comprises 161 firm-year observations from conventional banking companies listed on the Indonesia Stock Exchange over the 2020–2024 period.
Findings – The results reveal that aggregate fintech expansion positively and significantly affects ROA, supporting the synergy theory over pure disruption. As expected, the non-performing asset ratio significantly degrades profitability. Interestingly, electronic transaction intensity shows no significant impact on ROA, validating the Information Technology (IT) Productivity Paradox during the banks' technological transition phase.
Originality/value – This research synthesizes external disruption pressures, internal digital adaptation, and risk mitigation into a single comprehensive framework. It challenges traditional disruption theories by proving that fintech expansion serves as a collaborative profitability driver for conventional banks rather than a mere substitute.
Implications – Managerially, banks should expand collaborative channeling partnerships with fintech platforms and strictly optimize IT capital expenditures. Policymakers are encouraged to formulate accommodating regulations for hybrid financial ecosystems.
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Copyright (c) 2026 Deva Amelia Fatikasari, S.Ak, Dr. Edy Supriyono, S.E.,M.Si.,Ak., CA., Hendri Triyanto, S.E., M.M. (Author)
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