<![CDATA[Credit sensitivity and profitability linkage among Indonesia Himpunan Bank Milik Negara (Himbara), consisting of Bank Mandiri, Bank Rakyat Indonesia (BRI), and Bank Negara Indonesia (BNI), is examined following the government’s IDR 200 trillion liquidity injection policy during the 2015–2024 period. This study uses panel data regression with 160 quarterly observations. The Common Effect Model is applied to Return on Assets (ROA), while the Fixed Effect Model with Least Square Dummy Variable and robust standard errors is used for Return on Equity (ROE) and Net Interest Margin (NIM). The results show that microcredit expansion positively affects ROA and ROE but reduces NIM. In addition, increases in the Micro Base Lending Rate consistently improve all profitability indicators. Non-Performing Loans (NPLs) are found to have the strongest negative effect on ROA and ROE, indicating that asset quality remains an important factor in banking profitability. The findings also suggest that liquidity stimulus alone is not sufficient to improve bank performance without effective credit risk management and operational efficiency. Excess liquidity may become counterproductive if it is not supported by stronger risk governance and selective lending practices.]]>
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