The study addresses the critical issue of optimizing bank performance through the interplay of corporate governance, capital structure, and financial stability, particularly in the context of Indonesia’s emerging market (Yitayaw et al., 2023). The purpose of the research is to investigate how these factors, specifically non-performing loans (NPLs), capital adequacy ratio (CAR), good corporate governance (GCG), and debt-to-assets ratio (DAR), influence the financial performance of Indonesian banks, measured by return on assets (ROA) and return on equity (ROE) (Abdullah & Tursoy, 2023). Utilizing a multiple regression analysis on a sample of 40 banks listed on the Indonesia Stock Exchange (IDX) over the period 2016–2022, the study examines these relationships in depth. Findings indicate that NPLs and CAR negatively impact both ROA and ROE, while GCG positively affects these performance metrics, underscoring the importance of effective governance frameworks (Nurwulandari et al., 2022). Additionally, DAR negatively influences profitability, suggesting that high debt levels may erode financial returns. The study concludes that optimal management of credit risk, capital adequacy, and corporate governance practices is essential for sustaining profitability in Indonesian banks. This paper is relevant for bank managers, policymakers, and regulators, offering insights into balanced financial strategies essential for enhancing stability and profitability in emerging banking markets.
Diansari et al. (2025) studied this question.