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Riset Akuntansi dan Keuangan IndonesiaRiset Akuntansi dan Keuangan Indonesia

This study analyzes the effect of digital transformation on the performance of Indonesian commercial banks, with financial risk measured by the Z-Score as a moderating variable. Using panel data regression on 21 listed banks from 2019 to 2023, the findings reveal that digital transformation has a positive and significant impact on Net Interest Margin (NIM), reflecting improved efficiency and profitability. However, when financial risk is considered, the direct effect of digital transformation becomes insignificant, suggesting that risk conditions may hinder the optimal benefits of digital initiatives. Interestingly, the interaction term between digital transformation and Z-Score is positive and significant, indicating that banks with higher financial stability are better positioned to leverage digital technologies. Furthermore, leverage and Non-Performing Loans (NPLs) show significant effects, while macroeconomic factors such as inflation and GDP growth are insignificant. These results highlight that the success of digital transformation depends not only on technology adoption but also on financial soundness and effective risk management. The findings provide practical implications for regulators and banking practitioners in designing sustainable digital transformation strategies that enhance competitiveness in the digital era.

The study concludes that digital transformation significantly impacts bank performance, particularly in improving Net Interest Margin (NIM).However, the positive effect of digital transformation is contingent on financial stability, as indicated by the Z-Score.Banks with strong financial resilience are better positioned to benefit from digital initiatives.Effective risk management and a sound capital structure are crucial for fully realizing the benefits of digitalization in the banking sector.

Future research should investigate the specific digital technologies that yield the most significant performance improvements for Indonesian banks, considering variations in bank size and complexity. Furthermore, a deeper exploration of the relationship between digital transformation and different types of financial risk – including credit risk, operational risk, and liquidity risk – is warranted. Finally, research could examine the role of regulatory frameworks and government policies in fostering a conducive environment for digital transformation in the banking sector, while simultaneously ensuring financial stability and consumer protection. These studies should employ a mixed-methods approach, combining quantitative analysis with qualitative insights from interviews with banking professionals and regulators, to provide a more comprehensive understanding of the challenges and opportunities associated with digital transformation in the Indonesian banking landscape. The research should also consider the impact of emerging technologies like blockchain and artificial intelligence on the future of banking in Indonesia, and how banks can effectively adapt to these changes to maintain their competitiveness and resilience.

  1. Firm Resources and Sustained Competitive Advantage - Jay Barney, 1991. firm resources sustained competitive... doi.org/10.1177/014920639101700108Firm Resources and Sustained Competitive Advantage Jay Barney 1991 firm resources sustained competitive doi 10 1177 014920639101700108
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