Determinant of Bank Buku 4 Performance with Capital Adequacy Ratio as Mediator Variable: Evidence from Indonesia

Abstract

Purpose: This study aims to determine the determinants of bank BUKU 4 performance. Theoretical framework: Research was conducted on the performance of the BUKU 4 banks without taking into account emerging markets in order to reevaluate the effects of NPL, LDR, and bank SIZE on bank performance. Design/methodology/approach: This study used secondary data, quarterly data of banking companies obtained from the website of the Financial Services Authority (OJK). Using E-views from 10 entities; three government banks (Bank Persero) and seven national private banks from 2020 to 2021. BUKU was born from Bank Indonesia Regulation on Business Activities and Office Network Based on Bank Core Capital. Findings: Using the Sobel Test, it was found that CAR does not act as a mediator of the influence of NPL and SIZE on ROA, but CAR can mediate the effect of LDR on ROA. Research, Practical & Social implications: The next researcher who wants to research the banking industry can develop further research by adding new variables such as Net Interest Margin (NIM) and BOPO. Factors outside the company can also be added, such as interest rates and inflation. Future research can also be done on other banks, such as BUKU 1 Bank, BUKU 2, or BUKU 3. Similar research can also be conducted on Islamic banking. Originality/value: This literally one of the first research works in Indonesia to determine the determinant of bank BUKU 4 performance with CAR as mediator variable.