The Effect of Credit Risk on Dividend Policy with Firm Size as a Mediating Variable in Indonesian State-Owned Banks

Abstract

This study aims to examine the effect of credit risk on dividend policy with firm size as a mediating variable in Indonesian State-Owned Banks listed on the Indonesia Stock Exchange (IDX) during the 2015–2025 period. Credit risk is measured using the Non-Performing Loan (NPL) ratio, dividend policy is proxied by the Dividend Payout Ratio (DPR), while firm size is measured by the natural logarithm of total assets. This study employs a quantitative approach with an explanatory research design. The data used are secondary data obtained from the annual reports of four state-owned banks listed on the Indonesia Stock Exchange. The sampling technique employed is saturated sampling, resulting in 44 research observations. Data were analyzed using multiple linear regression and mediation analysis with IBM SPSS Statistics. The results indicate that credit risk has a negative and significant effect on firm size. Furthermore, firm size has a positive and significant effect on dividend policy. However, credit risk does not have a significant direct effect on dividend policy. The mediation analysis reveals that firm size is unable to significantly mediate the relationship between credit risk and dividend policy. These findings suggest that dividend distribution decisions in Indonesian State-Owned Banks are influenced more by the characteristics and scale of the company than by changes in credit risk. This study is expected to contribute to the development of dividend policy literature in the banking sector and provide empirical evidence for managers, investors, and future researchers regarding the factors affecting dividend policy.