The Effect of Profit Efficiency toward Banks Performance: Does Bond Issuance Matter?
This research paper aims to better understand the impact of earnings efficiency on bank performance. This study will also examine how much the variable issuance of corporate bonds as a source of long-term debt funding for refinancing needs affects bank performance. Contingency framework is based on the integration of financial intermediation theory, pecking order theory and trade-off theory used in this study. The author tries to test the argument on banks that issue bonds and have the majority of shareholding as a sampler of more than 5% in the period between 2011 and 2018. Based on this research which is predictive and exploratory, this research will use analytical techniques to run the regression model. This research finds that banks will show an increase in performance when the percentage of bond issuance as an external funding source is more than 59%. Earnings efficiency proved to have a significant positive effect on bank performance.