RGEC as a Mirror of Bank Performance: A Comparative Analysis of Banking Health Levels

Aini Nur Arfira; Elmanizar

doi:10.58777/efi.v1i1.507

Authors

Aini Nur Arfira Faculty of Economics and Business, YARSI University, Jakarta
Elmanizar Faculty of Economics and Business, YARSI University, Jakarta

DOI:

https://doi.org/10.58777/efi.v1i1.507

Keywords:

Banking, Bank Health Level, RGEC

Abstract

The rapid growth of banking in Indonesia has made it essential to monitor bank performance. Bank Indonesia, as the central bank, supervises financial institutions to evaluate their financial health and activities. Despite global financial pressures, Indonesia’s banking sector has shown improvement, reflected in eased liquidity constraints and growth in non-performing as well as current loans. This study conducts a comparative assessment of bank health using the Risk Profile, Good Corporate Governance, Earnings, and Capital (RGEC) method, focusing on Bank Rakyat Indonesia (BRI) and Bank Danamon during 2013–2016, examined through an Islamic perspective. A comparative quantitative approach is employed to analyze differences in their financial health. The findings reveal variations between BRI and Danamon in Risk Profile, Good Corporate Governance, and Earnings. However, no significant difference was observed in Capital. From an Islamic perspective, the RGEC framework aligns with Sharia principles, as it emphasizes fair and transparent evaluation while avoiding prohibited elements such as fraud, exploitation, or activities that may harm others. Thus, this research not only highlights differences in the financial health of the two banks but also demonstrates the relevance of the RGEC method as an Islamic-compliant tool for assessing banking performance.

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