Abstract
This research aims to analyze the influence of bank-specific component to profitability of banking industry within the classification of commercial banking category 3 (Bank Umum Kegiatan Usaha 3, classification based on Central Bank of Indonesia) in the period of 2011 until 2015. The number of sample for this research are 8 banks or Bank Devisa. Independent variable used for this research are based on the ratio of banks. There are Capital measured by Capital Adequacy Ratio, Credit Risk measured by Non Performing Loan, and Liquidity Risk measured by Loan to Deposit Ratio. While dependent variable Profitability measured by Return On Assets. This research analyzed using Eviews 7 program for Panel Data Regression. The result of this research shows that Capital and Liquidity Risk has insignificance effect to Profitability. Meanwhile, Credit Risk has significant effect to Profitability
Highlights
According to Banking Regulation No 10/1998, banks are defined as busi- ness entities that collect funds from the public in the form of deposits and channel them to the public in the form of credit or other forms.The bank is a business entity in the financial sector with the main activity of receiving deposits and reallocating them in the form of loans and other services to the people who need them
The results show that Capital Adequacy Ratio (CAR) has no significant effect on Return on Assets (ROA)
Capital proxied by Capital Adequacy Ratio (CAR) has no significant effect on Profitability proxied by ROA
Summary
According to Banking Regulation No 10/1998, banks are defined as busi- ness entities that collect funds from the public in the form of deposits and channel them to the public in the form of credit or other forms. The bank is a business entity in the financial sector with the main activity of receiving deposits and reallocating them in the form of loans and other services to the people who need them. That banks can obtain benefits that are their main objectives The main objective of the banking business is to achieve maximum profit. Profitability is the bank’s ability to generate / earn profits (Gibson, 2011). Bank ROA is an indicator of managerial efficiency, because it can indicate the ability of management of the bank to generate income from its assets (Rose, 2013)
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