Ratio Analysis of Capital, Credits, Liquidity to Profit Ratio in Conventional Rural Banks in Indonesia

Abstract

Purpose: This paper aims to conduct academic research in the field of banking financial institutions by the use of financial ratios such as capital, non-performing loans, liquidity, and profit ratios at Rural Banks in Indonesia. Approach/Methodology/Design: The study covers all conventional rural banks in Indonesia using SPSS IBM 26 to determine the effect of capital ratios, non-performing loans, and liquidity on profits, before tax and after tax. The data used is secondary data based on reports sourced from the Financial Services Authority. Findings: The study has determined the effect of capital ratios, non-performing loans, and liquidity on gross profit and net income both partially and simultaneously and other findings on the effect of Return on Assets. on Return on Equity at conventional rural banks in Indonesia based on financial reports from 2012 until 2018. Practical Implications: The results are expected to provide a positive contribution to the understanding of capital ratios, non-performing loans, liquidity, and profits for academics, banks, regulators, investors, and other stakeholders. Originality/Value: The originality of the study refers to the sample used and its value has to do with the importance to be used in banking for policy making.