Abstract
The purpose of this study is to determine the impact of good corporate governance, as well as financial performance as measured by non-performing loans, net interest margin, return on assets, and loan to deposit ratios, on the capital adequacy ratio of conventional banking in the period 2015-2019, using data from the Federal Reserve. The composite value of banking self-assessment is the indicator that was utilized to determine good corporate governance in the context of this study. The quantitative approach used in this study was combined with secondary data. Purposive sampling was used in this study to select a sample of 35 banks, which was then analyzed. The findings revealed that GCG, NPL, ROA, and LDR had no impact on CAR. This occurs because the revenues obtained by the bank are used to mitigate the bank's operational risk, and so have no effect on the bank's capital adequacy ratio (CAR). The NIM has a negative and statistically significant effect on the CAR. This is due to the fact that the NIM indicates that the quantity of loans granted is increasing, implying that the risk faced by the bank is also increasing.
Highlights
The contribution of banking sector makes a significant contribution in accommodating the needs of the community related to finance, both in financing activities and resource activities
The findings revealed that GCG, non-performing loan (NPL), Return on Assets (ROA), and loan-to-deposit ratio (LDR) had no impact on capital adequacy ratio (CAR)
Based on the research conducted by Riyadi (2006), the ability of banks to manage productive assets in order to generate net interest revenue can be described by the term "Net Interest Margin." according Rianto and Salim (2020), the higher the profitability of a bank, the better the management of banking assets in terms of making a profit is
Summary
The contribution of banking sector makes a significant contribution in accommodating the needs of the community related to finance, both in financing activities and resource activities. According to Harahap (2010:305), profitability can be defined as the ability of financial institutions to maximize their existing resources in order to achieve their business objectives. When it comes to fulfilling its objectives, profitability is one of the variables that demonstrate the success and efficiency of the banking industry. On the basis of this description, the purpose of this study is to determine the relationship between the implementation of Good Corporate Governance and financial performance, as measured by nonperforming loans, net interest margin, loan-to-deposit ratios, and return on assets in the capital adequacy ratio of conventional banking in Indonesia between 2015 and 2019
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