Navigating the Risk-Return Spectrum: Strategic Insights into Consumptive and Productive Financing in Multifinance Companies

Author(s)	Hanif Santoso, Vania Prima Amelinda
Country	Indonesia
Abstract	This study examines the interplay between consumptive and productive financing in multifinance companies. The results reveal that both financing types enhance ROA and ROE, with productive financing offering higher returns but greater risks—as indicated by elevated Conditional Value at Risk (CVaR) levels—compared to consumptive financing. Johansen cointegration tests confirm stable long-term equilibria among key financial indicators. Utilizing Modern Portfolio Theory (MPT), this study demonstrates that strategic diversification can optimize risk-adjusted returns. The results support regulatory mandates for a minimum productive financing allocation and highlight the necessity of robust risk management practices to sustain financial resilience in volatile economic conditions.
Keywords	Multifinance Companies, Consumptive Financing, Productive Financing, Portfolio Diversification, Risk Management.
Field	Sociology > Banking / Finance
Published In	Volume 7, Issue 4, July-August 2025
Published On	2025-08-07
DOI	https://doi.org/10.36948/ijfmr.2025.v07i04.53040
Short DOI	https://doi.org/g9wjf5

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