Track: Business Management

Abstract

In a wider context, financial performance refers to the degree to which financial targets are or have been achieved and is an important component of risk management in finance. It is the method of calculating in monetary terms the outcomes of the policies and operations of an organisation. It is used over a given period of time to assess the overall financial health of companies and can also be used to compare related companies in the same industry or to compare aggregated industries or sectors. However, technological developments have forced various industries to adapt with the social media as a means of communication with consumers, including the banking industry to ensure their financial performance. Also, good communication with customers will improve banking financial performance. Thus, the present study is conducted to study does the social media affect financial performance of the banking industry. The secondary data were collected from Financial Services Authority of Indonesia for 30 banking institutions and the data analysed using the Pearson rank correlation. The results showed that the social media, such as Facebook and Instagram have a significant positive effect on the financial performance of the banking industry. Besides that, we found that other kind of social media, namely Facebook has no significant effect on financial performance. In conclusion, this study confirms that social media is one important factor that influence the banking industry financial performance in the context of Indonesia.

Keywords: Financial performance, social media, banking industry, Indonesia context