Bank Health and OJK Regulations in Indonesia's DigitalBanking Stability

Abstract

The banking sector plays a crucial role in supporting economic growth through financial intermediation, transaction services, and the facilitation of monetary policy. Bank health serves as a fundamental foundation for financial system stability, as it directly influences public trust, credit distribution capacity, and resilience to systemic risks. In Indonesia, the supervision of bank health is regulated by the Financial Services Authority (Otoritas Jasa Keuangan/OJK) through the Risk-based Bank Rating (RGEC) approach. However, the digitalization era has created new challenges in the form of cyber risks, data security concerns, and competitive pressures from fintech innovations. From the perspective of signaling theory, banks utilize financial indicators, such as the Capital Adequacy Ratio (CAR), to deliver positive signals to investors regarding their stability, reliability, and credibility. This study applies a literature review method to analyze bank health, regulatory roles, digitalization risks, and the relevance of signaling theory in the Indonesian banking sector. The findings highlight that strong governance, strict regulation, and secure technology adoption are essential to ensure that banks remain healthy, stable, and inclusive.