The Influence of Credit Risk on Financial Distress with Corporate Governance as a Moderating Variable

Roma Novaldi

doi:10.55927/fjmr.v4i9.438

Authors

Roma Novaldi Universitas Negeri Padang

DOI:

https://doi.org/10.55927/fjmr.v4i9.438

Keywords:

Credit Risk, Good Corporate Governance, Financial Distress, Profitability, Growth Opportunity

Abstract

This study aims to analyze the effect of credit risk on financial distress in banking companies in Indonesia and to assess the role of corporate governance (GCG) as a moderating variable. The research employs a quantitative approach with the population consisting of all banking companies listed on the Indonesia Stock Exchange (IDX) during the 2019–2023 period. Secondary data were obtained from annual reports of the companies and analyzed using a moderated regression analysis (MRA) model. The findings reveal that credit risk has a positive effect on financial distress, indicating that the higher the level of non-performing loans, the greater the likelihood of banks experiencing financial distress. Meanwhile, corporate governance does not show a significant role in moderating the relationship between credit risk and financial distress. These findings suggest that Indonesian banks must pay closer attention to credit risk in order to prevent financial distress.

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