The Influence of Capital Structure, Leverage, and Firm Size on the Financial Performance of Banks Listed on the IDX (2021–2024)

Abstract

This study aims to analyze the effect of capital structure, leverage, and firm size on the financial performance of banking companies listed on the Indonesia Stock Exchange (IDX) during the 2021–2024 period. The background of this research is based on global economic instability following the COVID-19 pandemic, which has impacted the banking sector, as well as inconsistencies in previous research findings (research gap). The research method used is a quantitative approach with multiple linear regression analysis. The data used are secondary data in the form of annual financial statements from 15 banking companies, with a total of 58 observations. The independent variables in this study are capital structure measured by the Capital Adequacy Ratio (CAR), leverage measured by the Debt to Equity Ratio (DER), and firm size measured by total assets (bank size), while the dependent variable is financial performance measured by Return on Assets (ROA). The results show that partially, capital structure, leverage, and firm size have an effect on financial performance with varying levels of significance. Simultaneously, all independent variables have a significant effect on the financial performance of banking companies. This study contributes to banking management in making strategic decisions related to funding structure and asset management to improve financial performance.