The Effect of Capital Adequacy, Credit Risk, and Liquidity on Commercial Banks Profitability in Indonesia Stock Exchange

Anastasia Anggraini, Dewa Gede Dharma Suputra

Abstract


The purpose of this study was to analyse the effect of capital adequacy, credit risk, and liquidity on company profitability. The research population is all banking companies listed on the Indonesia Stock Exchange (BEI). The sampling technique used purposive sampling method, namely the method of determining the sample with certain considerations. The sample criteria are the banking sector that is listed continuously on the Indonesian Stock Exchange as many as 38 banking companies listed on the IDX continuously during the 2015 - 2019 period. The results show that capital adequacy and liquidity have a positive effect on profitability and credit risk have a negative effect on profitability. This study illustrates that capital adequacy, liquidity, and credit risks can predict the level of profitability that can be used by investors and stakeholders in taking decisions.

Keywords


Capital adequacy, Credit risk, liquidity, and Profitability

Full Text:

PDF

References


Cashmere. (2011). Banking Management. Revised Edition. Jakarta: Rajawali Press.

Zaman, SJJAK. (2011). Determinants of bank profitability in Pakistan: Internal factor analysis. Journal of Yaşar University , 6 (23), 3794.

Munawir, S. (2004). Financial Statement Analysis, Fourth Edition. Yogyakarta: Liberty Purwaningsih

Anna. (2008). Selection of the Best Financial Ratio to Predict Bond Ratings: A Study on Manufacturing Companies Listed on the JSE.

Agustiningrum, Riski. (2013). Analysis of the Effect of CAR, NPL, and LDR on Profitability in Banking Companies. E-Journal of Management Study Program, Faculty of Economics and Business , Udayana University , 2 (8), 885-902.

Büyükşalvarcı, A., & Abdioğlu, H. (2011). Testing the weak form efficiency of the Turkish stockmarket. 5 (27), 11199-11209.

Kithinji, AM. (2010). Credit risk management and profitability of commercial banks in Kenya.

Puspitasari, D. (2009). Analysis of the effect of CAR, NPL, PDN, NIM, OEOI, LDR, and SBI interest rates on ROA (Study on foreign exchange banks in Indonesia 2003-2007 period) (Doctoral dissertation, Diponegoro University Postgraduate program).

Sudirman, IW. (2013). Banking Management Towards Professional Conventional Bankers.

Fahrizal, F., & Rahyuda, H. (2012). The Effect of Business Risk on Profitability at Village Credit Institutions in Kuta District, Badung Regency, 2010- 2012 Management E-Journal.

Kolapo, TF, Ayeni, RK, & Oke, MO. (2012). CREDIT RISK AND COMMERCIAL BANKS'PERFORMANCE IN NIGERIA: A PANEL MODEL APPROACH. Australian journal of business and management research , 2 (2), 31.

Oktaviantari, LPE, & Wiagustini, NLP. (2013). The Effect of Banking Risk Level on Profitability at BPR in Badung Regency. Management E-Journal , 2 (12).

Jha, S., & Hui, X. (2012). A comparison of financial performance of commercial banks: A case study of Nepal. African Journal of Business Management , 6 (25), 7601-7611.

Barus, AC, & Sulistyo, D. (2011). Relationship between Operational Efficiency and Profitability Performance in the Banking Sector that Go Public on the Indonesia Stock Exchange. Journal of Micro-Political Economy Entrepreneurs: JWEM , 1 (2).

Prasnanugraha P, P. (2007). Analysis of the Effect of Financial Ratios on the Performance of Commercial Banks in Indonesia (Empirical Study of Commercial Banks Operating in Indonesia) (Doctoral dissertation, Diponegoro University Undergraduate Program).

Nusantara, AB. (2009). Analysis of the Effect of NPL, CAR, LDR, and OEOI on Bank Profitability. Diponegoro University Journal .

Cristina, KM, & Artini, LGS. (2018). The Effect of Liquidity, Credit Risk, and Third Party Funds on Profitability at Rural Banks (BPRs). E-Journal of Management of Udayana University , 7 (6), 3353–338.

Peling, IAA, & Sedana, IBP. (2018). Effect of LDR, NPL, and OEOI on Profitability at PT. BPD Bali for the Period of 2009-2016. EUnud Management Journal , 7 (6), 2999–3026.

Asri, NN sri, & Suarjaya, AG. (2018). The Influence of Third Party Funds, Capital Adequacy Ratio, Liquidity, and Company Size on Profitability. E-Journal of Management of Udayana University , 7 (6), 3384–341.

Damayanti, PS. (2012). Analysis of the Influence of Size, Capital Adequacy Ratio (CAR), Deposit Growth, Loan To Deposit Ratio (LDR), Against Profitability of Go Public Banking in Indonesia 2005 - 2009. Journal of Management Science and Applied Accounting (JIMAT) ) , 3 (2), 45–54.

Dendawijaya, L. (2009). Banking Management . Jakarta: Ghalia Indonesia.

Houssem, R. (2014). What Determines the Profitability of Banks During and before the International Financial Crisis? Evidence from Tunisia. International Journal of Economics, Finance and Management , 2 (4), 330–337.

Capraru, B., & Ihnatov, I. (2014). Banks' Profitability in Selected Central and Eastern European Countries. Economics and Finance 16 , 1 (1), 587–591.

Roman, A., & Danuletiu, EA. (2013). Empirical Analysis Of The Determinants Of Bank Profitability In Romania. Annales Universitatis Apulensis Series Oeconomica , 15 (2), 580–593.

Francis, ME. (2013). Determinants of Commercial Bank Profitability in SubSaharan Africa. International Journal of Economics and Finance , 5 (9), 134–147.

Andrayani, Eirene Adhistya. (2018). The Effect of Capital Adequacy, Credit Risk, Operational Efficiency, and Liquidity on the Profitability of Banking Companies in Indonesia. Journal of Indonesian Business Management , 4 (8), 378-389.

Riyadi, S. (2006). Banking Assets and Liability Management. Jakarta: FEUI.

Yanti, FAK. (2015). The Influence of Third Party Funds, Capital Adequacy, Credit Risk and Liquidity on the Profitability of LPD in Badung Regency. EUnud Management Journal , 4 (12), 4362–4391.

Anggreni, MR, & Suardhika, IMS. (2014). Effect of Third Party Funds, Capital Adequacy, Credit Risk and Credit Interest Rates on Profitability. Udayana University Accounting E-Journal , 9 (10), 27–38.

Ghazali, Imam. (2016). Multivariate Analysis Application with IBM SPSS 23 Program . Eighth Edition. Diponegoro University Semarang.


Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.


Supported by :







Indexed by :