Relationship Between Company Financial Leverage and Financial Performance Pre and During Covid-19 Era : Listed Bank Companies In Indonesia

Abstract

During the Covid-19 Pandemic, Indonesian companies, especially banks as a financial institution have been impacted in various ways. It might impact how their financing policies, reflected by the financial leverage, affect the company financial performance. Therefore it is important to understand the relationship between financial leverage and company performance of banks in Indonesia, before and during the Covid-19 pandemic in order to acknowledge the difference and the relationship between the two variables in the case of a very crucial commodity, the banking sector. Using the publicly available data from the Indonesian Stock Exchange, the data from the 43 listed bank companies is collected, and analyzed using the Pearson correlation coefficient moment. Based on the empirical evidence, it is concluded that financial leverage has a different impact on the various measurements of the company performance. Regarding the Covid-19 pandemic impact, it also shows a different relationship between the two variables pre, and during the pandemic era on some of the measurements. So, the findings can be a supporting information for the banks in Indonesia to consider their financing policies, by determining the financial leverage, considering the current worldwide pandemic. The variety of relationships between the two variables also reflect how previous researchers have done and concluded in previous studies.

Keywords: bank, financial leverage, company financial performance, covid-19, pearson correlation coefficient.