The Effect Of Capital Structure And Liquidity On Financial Sustainability Through Performance

Nani Rohaeni, Meutia Meutia, Ina Indriana and Yeni Januarsi

Data and Metadata, 2024, vol. 3, .646

Abstract: Introduction: This study was conducted to determine whether there is a relationship between capital structure and liquidity to financial sustainability through financial performance as a mediating variable. Because in some cases capital structure has an important role in business activities in a company. Objective: This study aims to analyze the effect of capital structure and liquidity on financial sustainability with financial performance as a mediating variable. Capital structure is measured using the Debt to Equity Ratio (DER), liquidity is measured using the Loan to Deposit Ratio (LDR), financial performance is measured using Return on Equity (ROE), and financial sustainability is measured by the Sustainable Growth Rate (SGR). Method: This study uses a quantitative approach with a causal design. Secondary data were obtained from the financial statements of companies listed on the Indonesia Stock Exchange (IDX) in the banking sector during the period 2018–2023. The data analysis methods used in this study are classical assumption tests and multiple linear regression to analyze direct effects and to analyze mediation effects. Result: The findings of this study prove that capital structure and liquidity have a positive and significant effect on financial performance. Capital structure and liquidity have a positive and significant effect on financial sustainability. Financial performance is proven to have an effect on financial sustainability. Financial performance is also proven to mediate the effect of capital structure and liquidity on financial sustainability. Conclusion: These findings indicate that optimal management of capital structure and liquidity, accompanied by improved financial performance, can improve the financial sustainability of the company.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:dbk:datame:v:3:y:2024:i::p:.646:id:1056294dm2024646

DOI: 10.56294/dm2024.646

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