ROA DETERMINANTS AND IMPACTS ON CAR (STUDY IN THE FIVE LARGEST PRIVATE BANKS IN INDONESIA 2009-2018)

M Noor Salim,Lucya Oktavia Mundung

doi:10.38035/dijefa.v1i4.541

Abstract

This study aims to analyze the effect of Loan to Deposit Ratio (LDR) and Net Interest Margin (NIM) on Return on Assets (ROA) and the influence of Loan to Deposit Ratio (LDR), Net Interest Margin (NIM) and Return on Assets (ROA) to the Capital Adequacy Ratio (CAR) of the five largest private banks in Indonesia in the 2009 - 2018 period. The sample used in this study consisted of 5 conventional private banks listed on the IDX. This study uses panel data obtained from Bank Indonesia reports and annual financial reports that have been audited and published by sample banks on the IDX By using the Fixed Effect Model with the help of Eviews 10, the F test shows that the LDR and NIM variables together have a significant effect on ROA of 77.69% while the remaining 22.31% is influenced by other factors not included in the research model. LDR, NIM and ROA variables together have a significant effect on CAR of 42.85% while the remaining 57.15% are influenced by other factors not included in this study where previously classical assumption tests such as Stationary, Multicollinearity, Test Heteroscedasticity and Autocorrelation test. Based on the results of the t test it was found that the LDR and NIM partially had no significant effect on ROA. LDR has a significant effect on CAR. Meanwhile, NIM and ROA partially had no significant effect on CAR

Highlights

The turmoil of the global financial crisis in 2008 has changed the world economy
The results of data testing using the E-views 10.0 tool obtained the FEM (Fixed Effect Model) model, after the F test was carried out, the independent variables together had a significant effect on the dependent variable
For the F test of the Loan to Deposit Ratio (LDR) and Net Interest Margin (NIM) variables on Return on Assets (ROA), the R-square value (R2) = 0.7769 shows that 77.69% of the variance of ROA can be explained by changes in the LDR and NIM variables

Summary

Introduction

The turmoil of the global financial crisis in 2008 has changed the world economy. The global crisis that began in the United States in 2007, is increasingly being felt throughout the world, including Indonesia.Available Online: https://dinastipub.org/DIJEFAOn the financial market, the risk spread of Indonesian securities increased significantly, which led to capital outflows from foreign investment on the stock market, Government Securities (SUN), and Bank Indonesia Certificates (SBI). The turmoil of the global financial crisis in 2008 has changed the world economy. The global crisis that began in the United States in 2007, is increasingly being felt throughout the world, including Indonesia. The risk spread of Indonesian securities increased significantly, which led to capital outflows from foreign investment on the stock market, Government Securities (SUN), and Bank Indonesia Certificates (SBI). Speaking, Indonesia's own position in general is not the worst among other countries. The Indonesian economy was still able to grow by 6.1% in 2008. The fundamentals of the external, fiscal and banking industries were strong enough to withstand the global crisis

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Conclusion