Fintech Impact on Indonesian Bank Performance via Credit Risk

Abstract

This study aims to analyze the effect of financial technology on the financial performance of conventional commercial banks in Indonesia during the 2023-2025 period, both directly and through credit risk as a mediating variable. The study employs a quantitative causal approach using panel data, focusing on financial technology, credit risk, and financial performance. The study population consists of 45 conventional commercial banks listed on the Indonesia Stock Exchange, with the sample selected through purposive sampling, resulting in 13 banks and 39 observations over the 2023-2025 period. The data were analyzed using panel data regression with EViews 12 software, followed by a mediation test. The results indicate that financial technology does not have a significant direct effect on either credit risk or financial performance. Credit risk, proxied by Non-Performing Loans (NPL), has a significant negative effect on Return on Assets (ROA); however, credit risk was not found to mediate the effect of financial technology on financial performance. These findings indicate that Non-Performing Loans (NPL) were the dominant determinant of bank profitability during this period, while the adoption of financial technology has not yet had a significant impact, either directly or through improvements in credit quality.