Abstract
This study aims to determine the effect of Capital Adequacy proxied with Capital Adequacy Ratio (CAR), Liquidity proxied by Loan to Deposit Ratio (LDR), and Credit Risk proxied by Non Performing Loans (NPL) toward Profitability proxied by Return on Asset (ROA). Population in this study are banking companies listed on the Indonesia Stock Exchange (IDX) 2015-2017. The technique of determination of the sample using the method of purposive sampling and obtained 27 banking companies with a research period of three years to obtain 81 units of samples. Data analysis was done using Microsoft Excel 2010 and hypothesis testing in this research using Data Panel Regression Analysis with the E-Views 9.0 program and a significance level of 5%. The results of the research shows that (1) capital adequacy (CAR) has a significant positive effect on profitability (ROA), (2) liquidity (LDR) has a positive and significant effect on profitability (ROA), (3) credit risk (NPL) has a negative effect and significant to profitability (ROA).
Highlights
Bank activities in collecting unemployed funds from the public and companies channeled into productive efforts for various economic sectors will increase national income and community income
This means that when the liquidity increases, it can be seen that the funds given to the community in the form of credit have increased as well, with the increase in loans given, Indonesia Stock Exchange (IDX) during the period 2015-2017
The purpose of this study was to determine the effect of Capital Adequacy, Liquidity and Credit Risk on bank profitability
Summary
Bank activities in collecting unemployed funds from the public and companies channeled into productive efforts for various economic sectors will increase national income and community income. The main purpose of banks in achieving optimal levels of profitability will be in line if the activities of raising funds and channeling funds to banks are carried out optimally and efficiently. The problem in credit activities that is common is the inability of customers to carry out their obligations to lenders. When a bank does its job of channeling funds, namely providing loans to customers, but customers fail to fulfill their obligations, bad credit will increase. Liquidity is the ability of the bank's management to provide sufficient funds to fulfill its obligations at any time. This means that if the company is billed, the company will be able to fulfill the money, especially debt that is due
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