Abstract
Financial conglomerates hold the majority of Indonesia’s financial system assets. The recent enactment of Law No. 4 of 2023, alongside OJK Regulation No. 30 of 2024, has significantly widened the supervisory perimeter from four to thirteen categories of financial services institutions. Despite these massive regulatory shifts, whether this structural policy pays for itself in performance terms remains empirically untested. Therefore, this study aims to investigate whether the financial conglomerates policy raises banking profitability and efficiency in Indonesia when the macroeconomic environment is held constant. The research employs a dynamic panel analysis of fifteen conglomerate groups observed quarterly from 2019Q1 to 2025Q2 (315 usable observations), estimated via fixed effects with standard errors clustered at the group level. Dependent variables include return on assets, net interest margin, and the operating-expense-to-operating-income ratio. Conglomeration policy is proxied by group asset share and group membership share, supported by macroeconomic control variables. Furthermore, a PRISMA-based systematic literature review of eleven Scopus-indexed studies complements the estimation. The results show that the asset-share proxy carries a negative and weakly significant coefficient on return on assets and is statistically indistinguishable from zero for margin and cost efficiency. By contrast, the membership proxy is positively and significantly associated with return on assets, indicating that perimeter breadth and asset concentration operate through opposite channels. Ultimately, the findings conclude a resilience-profitability trade-off: the conglomerate structure that improves credit risk outcomes simultaneously compresses returns. As a policy implication, financial supervisors should price this trade-off explicitly rather than assume that prudential consolidation is performance-neutral.