Financial Leverage and Financial Performance of Conventional Banks in Indonesia

This study aims to examine the impact of financial leverage on the financial performance of conventional banks listed on the Indonesia Stock Exchange. The dependent variable used in this study is a return on assets and return on equity. Meanwhile, this study's independent variables are debt ratio, debt to equity ratio, interest coverage ratio, and cash coverage ratio. The sample used was 21 conventional banks for ten years from 2010-2019. The type of data used is secondary data. The sampling technique used was the purposive sampling method. The data analysis model used was panel data regression. The results showed that the debt ratio positively affects return on assets and return on equity. The debt-equity ratio has a positive effect on return on assets but has a negative and significant effect on return on equity. Interest coverage ratio has no effect on return on assets and return on equity, and cash coverage ratio has no effect on return on assets and return on equity. Maximizing shareholder profits and financial performance can be made by considering the debt ratio and debt-equity ratio. Keywords: financial leverage, financial performance, conventional bank.