European Journal of Business and Management
Role of Risk Appetite Mediating the Effect of Interest Rate Risk and Credit Risk to Profitability
Abstract
This research aims to analyze and explain the effect of the interest rate risk and credit risk to risk appetite and profitability, the effect of risk appetite to profitability and role of risk appetite mediating the effect of interest rate risk and credit risk to profitability. This research is conducted at Rural Banks in Bali in the period of 2013 to 2015 through the census totaling of 104 units, which 100 units who have complete data. The analysis model performed in this research is Structural Equation Modelling (SEM) with Partial Least Square (PLS) approach. The results found that the interest rate risk has positive effect on risk appetite and profitability, the credit risk has negative effect on risk appetite and profitability, the risk appetite has positive effect on profitability and the risk is mediating the effect of interest rate risk and credit risk to profitability.
Keywords: risk appetite, interest rate risk, credit risk, profitability
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ISSN (Paper)2222-1905 ISSN (Online)2222-2839
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