THE INFLUENCE OF CAPITAL ADEQUACY RATIO AND NON-PERFORMING LOAN ON PROFITABILITY OF COMMERCIAL BANKS LISTED ON THE INDONESIA STOCK EXCHANGE IN 2017-2019

Nathaniel Karel Djaya () and Ika Yanuarti ()
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Nathaniel Karel Djaya: Multimedia Nusantara University, Indonesia
Ika Yanuarti: Multimedia Nusantara University, Indonesia

Business Excellence and Management, 2021, vol. 11, issue 4, 80-94

Abstract: This study has the purpose to analyze the influence of Capital Adequacy Ratio and Non-Performing Loan on profitability of Commercial Banks. The sample of this study consists of 26 Commercial Banks listed on the Indonesia Stock Exchange in 2017-2019. This research used Multiple Regression Analysis to analyze the data gathered from audited financial reports of those banks. The results showed that the Capital Adequacy Ratio and Non-Performing Loan simultaneously affect the Profitability, which means that if there is an increase in Capital Adequacy Ratio and Non-Performing Loan, then it will be followed by an increase in Return on Assets. However, if it`s tested partially then it is only Non-Performing Loans that affect the Return on Assets. The influence was negative and statistically significant. The Capital Adequacy Ratio had positive influence on Return on Assets but not statistically significant.

Keywords: Capital Adequacy Ratio; Non-Performing Loan; Return on Assets (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:rom:bemann:v:11:y:2021:i:4:p:80-94

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