Financial, Investment and Operational Cash Flow on Banking Performance in Indonesia

Authors

  • Apriani Simatupang Universitas Pelita Harapan
  • Radityo Fajar Arianto Universitas Pelita Harapan

Keywords:

Cash Flow, ROA, Banking, Indonesia Stock Exchange, Financial Performance

Abstract

This study analyzes the influence of cash flows from funding activities or financial (CFF), investment (CFI), and operations (CFO) on Return on Assets (ROA) in the banking sector in Indonesia. Data was obtained from 40 banks listed on the Indonesia Stock Exchange (IDX) during 2010–2022 and analyzed using a fixed effects model panel regression. The results showed that only CFOs had a significant influence on ROA, but in a negative direction, indicating that an increase in operating cash flow was actually correlated with a decrease in ROA. CFF and CFI did not have a significant effect on ROA, indicating that funding and investment activities had less impact on profitability. The implications of this study emphasize the need for more strategic operational cash flow management to support asset efficiency and financial performance of banks.

References

Alshammari, T. (2020). “Cash level and corporate performance: evidence from the Gulf Cooperation Council countries.” Investment Management and Financial Innovations, 17(4), 14–24. https://doi.org/10.21511/imfi.17(4).2020.02

Arifaj, A. H., Berisha, V., Morina, F., & Avdyli, E. (2023). Exploring the impact of cash flow, company size, and debt on financial performance in corporations. Investment Management and Financial Innovations, 20(3), 264–272. https://doi.org/10.21511/imfi.20(3).2023.22

Drobetz, W., Haller, R., Meier, I., & Tarhan, V. (2017). The impact of liquidity crises on cash flow sensitivities. Quarterly Review of Economics and Finance, 66(October), 225–239. https://doi.org/10.1016/j.qref.2017.03.004

Egwu, E. M., Orugun, F. I., & Adelakun, A. (2021). Exploration of Cash Flow Management for Enterprise’s Business Performance. Asian Journal of Economics, Business and Accounting, 21(10), 97–105. https://doi.org/10.9734/ajeba/2021/v21i1030435

Eksandy, A., & Abbas, D. S. (2020). Relevansi Nilai Earning per Share, Price Book Value, Cash Flow, Current Ratio dan Harga Saham: Return on Asset Sebagai Pemoderasi. Jurnal Akuntansi, 12(2), 187–202. https://doi.org/10.28932/jam.v12i2.2152

Gautam, B., Dhungel, B., Tamang, B. R., & Koirala, B. (2024). Impact of Earnings and Cash Flow on Stock Return: A Case of Nepalese Commercial Banks. Nepalese Journal of Economics, 8(2), 52–70. https://doi.org/10.3126/nje.v8i2.68804

Liandu, H., Adam, M., Widiyanti, M., & Isnurhadi, I. (2023). Effect of Operating Cash Flow and Profit Management on Company’S Profitability and Growth. International Journal of Business, Economics & Management, 6(3), 247–254. https://doi.org/10.21744/ijbem.v6n3.2170

Rahman, A., & Sharma, R. B. (2020). Cash flows and financial performance in the industrial sector of Saudi Arabia: With special reference to insurance and manufacturing sectors. Investment Management and Financial Innovations, 17(4), 76–84. https://doi.org/10.21511/imfi.17(4).2020.07

Ramazani, M., Salehi, M., & Laridashtbayaz, M. (2019). Relationship Between Cash Flow Management and Financial Performance of Companies Listed on the Tehran Stock Exchange. Зборник Радова Економског Факултета У Источном Сарајеву, 1(17), 27. https://doi.org/10.7251/zrefis1817027r

Seyhan, Pelin, & Nur, T. (2024). Profiles and analysis of cash flows in enterprises: on the example of an enterprise in Kazakhstan and Turkey. 222–231.

cover image of proceedings

Downloads

Published

2025-01-21

Issue

Vol. 4 (2024): Proceedings of the 4th International Conference on Entrepreneurship (IConEnt)

Section

Articles

License

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.