THE EFFECT OF PEER-TO-PEER LENDING AND THIRD-PARTY PAYMENTS ON CONVENTIONAL COMMERCIAL BANK PROFITABILITY IN INDONESIA

This research aims to analyse the effect of peer-to-peer lending and third-party payments on the profitability of conventional commercial banks. This study uses a sample of 86 conventional commercial banks supervised by the Indonesia Financial Services Authority for the period of January 2017 to June 2019. In the analysis, peerto-peer lending and third-party payments are selected as independent variables, which are measured by the volume of a transaction. As the dependent variable, profitability is measured by the capital adequacy ratio, non-performing loans, net interest margin, loan-to-deposit ratio, operating efficiency, and ln of total assets (lnTA) as a control variable measuring bank characteristics. The results of this study are that peer-topeer lending has a negative effect on bank profitability, whereas third-party payments have a positive effect on bank profitability. In addition, bank characteristics, as calculated with lnTA, have a positive effect on bank profitability