Abstract
This research was conducted to determine the effect of liquidity, NPL, and capital structure on the profitability of banking financial institutions on the Indonesia Stock Exchange partially and simultaneously. The research method uses a quantitative approach. Data analysis techniques used in this study were multiple regression analysis techniques. Testing research data using the classic assumption test, normality test, multicollinearity test, heteroscedasticity test, and autocorrelation test. The results showed that 1) Liquidity variables have an influence on bank profitability. This causes the customer to trust the bank in providing credit services due to the bank's ability to refinance its obligations to customers who hold their funds using current assets that are running well. 2) The NPL variable has no influence on bank profitability. This causes the amount of problem loans to be greater, causing problems, namely losses caused by the rate of return on bad loans. 3) Variable capital structure has no influence on bank profitability. This is because bank capital is not channeled to the public, thus making the capital unproductive and not producing profits for the company. 4) Simultaneously changes in liquidity, NPL and capital structure variables together have a significant effect on the profitability of banks on the Indonesia Stock Exchange.
Highlights
The main activity of banking financial institutions is to collect funds from the public and channel these funds back to the community and provide other bank services (Kasmir, 2000)
2) The NonPerforming Loans (NPL) variable has no influence on bank profitability
This causes the amount of problem loans to be greater, causing problems, namely losses caused by the rate of return on bad loans
Summary
The main activity of banking financial institutions is to collect funds from the public and channel these funds back to the community and provide other bank services (Kasmir, 2000). From this understanding it can be interpreted that the function and task of banks is to collect and channel funds back to the community in the form of loans or lending to the public. Investors need information about the company's performance. Users of bank financial statements need information that is understandable, relevant, reliable and comparable in evaluating the financial position and performance of banks and useful in making economic decisions (Tweedie & Seidenstein, 2004). According to Ambarwati, Yuniarta & Sinarwati, 2015), profitability or profitability shows the company's ability to generate profits for a certain period
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