The Moderation Role of Company Size in Increasing Profitability in the Sector Banking

Abstract

Profitability has an important meaning in an effort to maintain the continuity of the company, because profitability shows whether the business entity has good prospects in the future. Based on data obtained in the annual reports of Rural Banks (BPR) throughout Denpasar City, the profitability of BPRs over the last six years has decreased significantly. The formulation of the research problem is how is the effect of the Capital Adequacy Ratio and Loan to Deposit Ratio moderated by Company Size on Profitability in BPRs throughout the City of Denpasar? This study uses a quantitative descriptive approach with secondary data sources. The research population is all BPRs in Denpasar City, totaling 22 units. Determination of the sample using purposive sampling in order to obtain 20 BPR units as a sample and 120 observational data. The research instrument uses documentation techniques or non-participant observation. Methods of data analysis using descriptive analysis and inferential analysis with moderation or moderated regression analysis The results of the study show that the Capital Adequacy Ratio has no effect on Return on Assets. Loan to Deposit Ratio has a positive and significant effect on Return on Assets. Company size is not able to moderate the effect of Capital Adequacy Ratio on Return on Assets. Company size is able to moderate the effect of Loan to Deposit Ratio on Return on Assets. The implication of the research is that this research provides information for BPRs throughout Denpasar City regarding the effect of Capital Adequacy Ratio and Loan to Deposit Ratio on Return on Assets which is moderated by Firm Size so that BPR management throughout Denpasar City can determine future policy directions in order to increase profitability and progress BPR in Denpasar City.