The Moderation Effect of External Auditor on the Relationship between Bank Characteristics and Credit Risk
DOI:
https://doi.org/10.29407/e.v12i2.27027Keywords:
bank size, bank age, credit riskAbstract
This research provides quantitative research using secondary data related to the moderating influence between the role of bank size and age on credit risk. Data from banking company financial reports for 2022-2024 were analyzed using Moderated Regression Analysis (MRA). The study found a significant negative effect on the relationship between bank size and credit risk, and a moderating effect of external auditors on the relationship between bank age and credit risk. Furthermore, no significant relationship was found between company age and credit risk, and external auditors failed to moderate the relationship between bank size and credit risk. This research opens up opportunities to examine more deeply the influence of macroeconomic factors.
References
Abdallah, S. (2018). External auditor type, discretionary accruals and investors’ reactions. Journal of Accounting in Emerging Economies, 8(3), 352–368. https://doi.org/10.1108/JAEE-10-2017-0098
Adusei, M. (2015). The impact of bank size and funding risk on bank stability. Cogent Economics and Finance, 3(1). https://doi.org/10.1080/23322039.2015.1111489
Amare, A. (2021). Capital structure and profitability: Panel data evidence of private banks in Ethiopia. Cogent Economics and Finance, 9(1). https://doi.org/10.1080/23322039.2021.1953736
Antony, T. M., & Suresh, G. (2023). DETERMINANTS OF CREDIT RISK: EMPIRICAL EVIDENCE FROM INDIAN COMMERCIAL BANKS. Banks and Bank Systems, 18(2), 88–100. https://doi.org/10.21511/bbs.18(2).2023.08
Arwinge, O. (2013). Internal Control. Physica Heidelberg. https://doi.org/https://doi.org/10.1007/978-3-7908-2882-5
Athar, M., Chughtai, S., & Rashid, A. (2023). Corporate governance and bank performance: evidence from banking sector of Pakistan. Corporate Governance (Bingley), 23(6), 1339–1360. https://doi.org/10.1108/CG-06-2022-0261
Benali, W. (2025). Effects of CSR, company size, and company age on financial performance: firms listed on the Tunisian stock exchange. SN Business and Economics, 5(7). https://doi.org/10.1007/s43546-025-00851-6
Berger, A. N., & Udell, G. F. (1995). Relationship Lending and Lines of Credit in Small Firm Finance. In Source: The Journal of Business (Vol. 68, Issue 3). https://about.jstor.org/terms
Committee of Sponsoring Organizations of the Treadway Commission. (2013). Internal control—Integrated framework: Executive summary. Retrieved from https://www.coso.org/_files/ugd/3059fc_1df7d5dd38074006bce8fdf621a942cf.pdf.
Cinaj, V., Mece, M., Ribaj, A.,& Kadrimi, I. (2020). The need for improvement of external audit report of banks (The case of banks in Albania which mainly belong to EU Banks). WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT, 16. DOI: 10.37394/232015.2020.16.55
Dang, H. T., Phan, D. T., Nguyen, H. T., & Hoang, L. H. T. (2020). Factors Affecting Financial Risk: Evidence from Listed Enterprises in Vietnam. The Journal of Asian Finance, Economics and Business, 7(9), 11–18. https://doi.org/10.13106/jafeb.2020.vol7.no9.011
Grandi, P., Darriet, E., Guille, M., & Belin, J. (2019). Does Bank Capital Matter for Corporate Borrowers? Evidence from France. 72(1), 5–42. https://doi.org/10.2307/26983690
Gupta, N., & Mahakud, J. (2020). Ownership, bank size, capitalization and bank performance: Evidence from India. Cogent Economics and Finance, 8(1). https://doi.org/10.1080/23322039.2020.1808282
Gyimah, P., & Owusu-Afriyie, R. (2025). Bank sustainability: Do corporate governance and internal audit quality matter? World Development Sustainability, 6. https://doi.org/10.1016/j.wds.2025.100222
Hodgdon, C. D., & Porter, R. L. (2017). Auditor Choice and the Consistency of Bank Accounting: are Some Auditors Stricter than Others When Assessing the Value of a Banks Loan Portfolio? In 40 Journal of Accounting and Finance (Vol. 17, Issue 2). http://www.na-businesspress.com/JAF/HodgdonCD_Web_17_2_.pdf
Jensen, M. C., & Meckling, W. H. (1976). THEORY OF THE FIRM: MANAGERIAL BEHAVIOR, AGENCY COSTS AND OWNERSHIP STRUCTURE. In Journal of Financial Economics (Vol. 3). Q North-Holland Publishing Company.
Knaup Martin, & Wagner Wolf. (2012). A Market-Based Measure of Credit Portfolio Quality and Banks' Performance During the Subprime Crisis. Management Science 58(8):1423-1437.
Koutoupis, A. G., & Malisiovas, T. (2023). The effects of the internal control system on the risk, profitability, and compliance of the U.S. banking sector: A quantitative approach. International Journal of Finance and Economics, 28(2), 1638–1652. https://doi.org/10.1002/ijfe.2498
Masciandaro, D., Peia, O., & Romelli, D. (2020). Banking supervision and external auditors: Theory and empirics. Journal of Financial Stability, 46. https://doi.org/10.1016/j.jfs.2019.100722
Mirzaei, A., Moore, T., & Liu, G. (2013). Does market structure matter on banks’ profitability and stability? Emerging vs. advanced economies. Journal of Banking and Finance, 37(8), 2920–2937. https://doi.org/10.1016/j.jbankfin.2013.04.031
Napitupulu, I. H. (2023). Internal Control, Manager’s Competency, Management Accounting Information Systems and Good Corporate Governance: Evidence from Rural Banks in Indonesia. Global Business Review, 24(3), 563–585. https://doi.org/10.1177/0972150920919845
Sanyaolu, W. A., Siyanbola, T. T., Makinde, H. B. (2020). Determinants of the non performing loans of Nigerian depositmoney banks. Ekonomski horizonti, 22(1), 31-45. doi:10.5937/ekonhor2001031S
Tahir, M., Shah, S. S. A., Sayal, A. U., & Afridi, M. A. (2020). Loan quality: does bank corporate governance matter? Applied Economics Letters, 27(8), 633–636. https://doi.org/10.1080/13504851.2020.1728223
Zhang, D., Cai, J., Dickinson, D. G., & Kutan, A. M. (2016). Non-performing loans, moral hazard and regulation of the Chinese commercial banking system. Journal of Banking and Finance, 63, 48–60. https://doi.org/10.1016/j.jbankfin.2015.11.010
Downloads
Published
Versions
- 2025-12-08 (4)
- 2025-12-08 (3)
- 2025-12-08 (2)
- 2025-12-08 (1)
Issue
Section
License
Copyright (c) 2025 DIAN RUBIHANI, Vincentia Anindha Primacintya
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Copyright on any article is retained by the author(s).
- The author grants the journal, the right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work’s authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal’s published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
- The article and any associated published material is distributed under the Creative Commons Attribution-ShareAlike 4.0 International License
How to Cite
