Abstract
During the period 2006-2019 many rural banks were liquidated by Indonesia Deposit Insurance Corporation (LPS) which have an impact on the performance of rural banks. This study aims to determine the effect of CAR, LDR, OCOI and NPL on the ROA of Rural Banks in Indonesia. The results of the study show that CAR, LDR, and OER have a significant effect on ROA. Every increase in operating costs will result in a decrease in pre-tax profit which results in a decrease in ROA. NPL has no significant effect on ROA. because rural bank has a large CAR ratio to cover credit risk.
Highlights
Based on Law of the Republic of Indonesia No.10 of 1998 concerning changes to Law Number 7 Year 1992 concerning Banking, bank financial institutions consisting of Commercial Banks and Rural Banks
The research method used is quantitative which emphasizes the theory testing through the measurement of CAR, LDR, BOPO and NPL variables to determine the effect on ROA in Indonesia (Pandoyo & Sofyan, 2018)
The research data is in the form of ROA, CAR, LDR, operating costs with total operating income (OCOI) and NPL ratios obtained from https://www.bi.go.id/id/statistik/perbankan/bpr-konvensional/ processed and analyzed with the financial theory approach and banks to find out the ROA of BPRs in Indonesia
Summary
Based on Law of the Republic of Indonesia No. of 1998 concerning changes to Law Number 7 Year 1992 concerning Banking, bank financial institutions consisting of Commercial Banks and Rural Banks. Likewise with commercial banks and foreign banks that are intensely expanding the micro credit sector is a mainstay of rural banks (Sofyan, 2019). Banks is an assessment of the bank's performance through assessment and quantitative or qualitative assessments. Quantitative assessment of the factors of capital, asset quality, management, earnings, liquidity and sensitivity to market risk. Quantitative Assessment is an assessment of the position, development, and projected financial ratios of the Bank. While the qualitative assessment is an assessment of the factors that support the results of the quantitative assessment, risk management, and compliance of the Bank
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