Title: Analysis of Hedging Decisions in Non-Sharia Banks in Indonesia Using Panel Data Binary Logit Regression Model with Random Effects
Authors: Grace Lucyana Koesnadi, Suliyanto, M. Fariz Fadillah Mardianto, Sediono
Volume: 9
Issue: 1
Pages: 56-62
Publication Date: 2025/01/28
Abstract:
The increasing volatility of the global market has become a major challenge for the banking sector in Indonesia, especially in dealing with fluctuations in the rupiah exchange rate. To mitigate these risks, hedging strategies are crucial for maintaining financial stability. This study aims to analyze the factors influencing hedging decisions in Indonesia's non-Sharia banks, such as leverage, liquidity, profitability, firm size, and growth opportunities. Using a binary logit regression model with random effects on panel data, this research utilizes secondary data from the annual financial reports of non-Sharia banks listed on the Indonesia Stock Exchange (IDX) for the 2020-2022 period. The analysis reveals that leverage and firm size significantly influence hedging decisions, while liquidity and growth opportunities exhibit varying impacts. This study provides important insights into strategic exchange rate risk management to strengthen the financial stability of Indonesia's non-Sharia banking sector and support more accurate decision-making in financial risk mitigation.