The Impact of Digital Transformation on The Financial Performance of Indonesian Banking Firms (2021–2024)
Keywords:
digital transformation, banking, financial performance, ROA, text analysisAbstract
This study investigates how the disclosure of digital transformation activities relates to the financial performance of banks in Indonesia during the post-pandemic period. The analysis draws on a panel of 43 banking institutions listed on the Indonesia Stock Exchange between 2021 and 2024. Digital transformation is assessed by examining the frequency of relevant keywords in annual reports, while financial performance is measured using Return on Assets (ROA). Firm size, calculated as the natural logarithm of total assets, serves as a control variable. After removing outliers, the dataset includes 138 firm-year observations. Panel regression is performed using the Common Effect Model, selected based on the Chow test. The results indicate that greater intensity in digital transformation disclosure is linked to lower ROA, suggesting that short-term costs from technology investments, system integration, cybersecurity, and organizational adjustments may offset immediate financial benefits. This research contributes evidence from an emerging banking market and emphasizes that the financial advantages of digital transformation may not be reflected immediately in accounting-based performance measures.
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