Does CEO age affect the performance of banks in Indonesia?
Fahira Sal Sabila, Sholatia Dalimunthe, Michelle Natalie Susanto

Faculty of Economics State University of Jakarta State University of Jakarta

Abstract

The purpose of this study is to determine the impact of Chief Executive Officers (CEOs) age on the bank performance in a developing Southeast Asian capital market (Indonesia). The study uses unbalanced firm-level panel data for 40 banks listed on the Indonesia Stock Exchange (IDX) from 2010 to 2018. Net interest margin and capital adequacy ratio were used to measure bank performance. The data were analyzed using panel data regression analysis, including a fixed effects model. The results show that CEOs age improve bank performance proxied by net interest margin and reduce bank performance proxied by capital adequacy ratio. Age should be considered when appointing CEOs. Older CEOs have a competitive advantage over younger CEOs, who have less experience in business. This study backs to corporate governance studies by making CEO characteristic and examining its association with bank performance. Additionally, it highlights that emerging countries such as Indonesia have different economic, legal, social, and cultural environments than advanced countries, especially western countries.

Keywords: female CEO, bank performance, Indonesian stock exchange

Topic: Management