The Influence of Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL), and Loan to Deposit Ratio (LDR) on Profitability in Banking Companies on the Indonesia Stock Exchange

Abstract

Banking is a financial institution that has a role in the financial system in Indonesia. The existence of the banking sector has a fairly important role, where in public life most of it involves services from the banking sector. The main objective of bank operations is to achieve maximum profitability. The profitability ratio is the ratio to assess the company's ability to make a profit. This study aims to examine the effect of Capital Adequacy Ratio (CAR), Non Performing Loans (NPL), and Loan To Deposit Ratio (LDR) on Profitability in Banking Companies Registered on the Indonesia Stock Exchange (IDX) for the 2018-2020 period. The population used in this study were 43 banking companies listed on the Indonesia Stock Exchange (IDX). The sampling technique used purposive sampling method and obtained as many as 35 samples of companies with 3 years of observation, then the number of samples under observation was 105. This type of research is a quantitative study using multiple linear regression analysis methods. The results of the study show that the Capital Adequacy Ratio (CAR) has a positive and significant effect on Profitability in Banking Companies listed on the Indonesia Stock Exchange (IDX), Non Performing Loans (NPL) has a negative and significant effect on Profitability in Banking Companies listed on the Indonesia Stock Exchange (IDX), and Loan To Deposit Ratio (LDR) have a positive and significant effect on Profitability in Banking Companies listed on the Indonesia Stock Exchange (IDX). Suggestions for further research are expected to add other variables that affect the level of banking profits such as external factors (inflation, interest rates, and exchange rates).