Bank Credit Performance Based on Credit Decisions, Business Growth, and Credit Risk: Banking Credit Financing Applications in Indonesia

Abstract

The bank’s ability to extend credit to various businesses will shape credit performance. Bank credit performance results from measuring and assessing lending activities to achieve goals. This research analyzes a bank’s credit performance model based on credit decisions, aspects of business growth, and credit risk. This research methodology uses a quantitative approach. The research data uses time series data for 2015-2022. The number of observations/samples is 60. The data used is credit financing data for small and medium enterprises published on bi.go.id. Methods of data analysis using SEM-PLS. The research findings show that bank credit performance is influenced by credit decision aspects, business growth aspects, and credit risk seen from the fit model value of 0.36 (strong). Furthermore, it was also found that credit risk acts as a mediating variable. Based on this research’s recommendations, future studies on credit risk patterns and market valuations are needed. The practical implication of this research is that proper debt management and correct access to information can lead to business growth and low risk, thus impacting the bank’s performance.