The Effect of Net Loans Granted on the Profitability of Conventional Commercial Banks Listed on the Indonesia Stock Exchange

Abstract

This study aims to analyze the effect of net loans disbursed on the profitability of conventional commercial banks listed on the Indonesia Stock Exchange during the 2023–2025 period. The study is motivated by the strategic role of banks' intermediation function in supporting the post-COVID-19 economic recovery, as well as inconsistent findings in prior research regarding the relationship between lending and bank profitability. A quantitative approach was employed using secondary data from the annual financial statements of 30 conventional commercial banks selected through purposive sampling, yielding 90 observations over three years. Data were analyzed using panel data regression with a Random Effect Model (REM) estimated in EViews 14. The results show that net loans disbursed have a positive and significant effect on profitability, as proxied by Return on Assets (probability value of 0.0002). An Adjusted R-squared of 13.70% indicates that net lending is an important determinant, although not the sole factor influencing profitability. This study recommends that bank management maintain the quality of loans disbursed and take into account other factors, such as capital adequacy and operational efficiency, to enhance profitability.