International Journal of Applied Sciences & Development
E-ISSN: 2945-0454
Volume 4, 2025
Application of Equation Model with Two-Stage Least Squares Approach on Factors Affecting the Operational Efficiency Ratio of Banking Performance in Indonesia
Authors: , , ,
Abstract: In regression models, there are variables that are interrelated, requiring a method that can accommodate these variables, namely the simultaneous equation method. This study aims to determine the factors influencing Sustainability and the Operational Efficiency Ratio of Banking Performance in Indonesia and to model the simultaneous equations for the factors affecting Sustainability and the Operational Efficiency Ratio of Banking Performance in Indonesia using the two-stage least squares approach. The data in this study is secondary data obtained from the website of the Financial Services Authority. The results of the study show that in the simultaneous equation model using the two-stage least squares approach, the variable that significantly affects Sustainability is Digital Innovation. Meanwhile, the variables that significantly affect the Operational Efficiency Ratio of Banking Performance are Predicted Sustainability and Company Size. Based on the prediction values using the Sustainability and Operational Efficiency Ratio equations, the obtained MAPE value does not exceed 50%, indicating that the prediction results using the Sustainability and Operational Efficiency Ratio equations show accurate predictions.
Search Articles
Keywords: Sustainability, Digital Innovation, Intellectual Capital, Operational Efficiency Ratio (OER)
Pages: 127-133
DOI: 10.37394/232029.2025.4.14