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The Influence Of Capital Adequacy Ratio And Non-Performing Loan On Profitability Of Commercial Banks Listed On The Indonesia Stock Exchange In 2017-2019

Author

Listed:
  • Nathaniel Karel DJAYA

    (Multimedia Nusantara University, Indonesia)

  • Ika YANUARTI

    (Multimedia Nusantara University, Indonesia)

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.

Suggested Citation

  • Nathaniel Karel DJAYA & Ika YANUARTI, 2021. "The Influence Of Capital Adequacy Ratio And Non-Performing Loan On Profitability Of Commercial Banks Listed On The Indonesia Stock Exchange In 2017-2019," Business Excellence and Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 11(4), pages 80-94, December.
    • Handle: RePEc:rom:bemann:v:11:y:2021:i:4:p:80-94
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    References listed on IDEAS

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    1. Saima Javaid & Suha Alalawi, 2018. "Performance and Profitability of Islamic Banks in Saudi Arabia: An Empirical Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(1), pages 38-51, January.
    2. Abdulazeez Y. H. Saif-Alyousf & Asish Saha & Rohani Md-Rus, 2017. "Profitability of Saudi Commercial Banks: A Comparative Evaluation between Domestic and Foreign Banks using Capital Adequacy, Asset Quality, Management Quality, Earning Ability and Liquidity Parameters," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 477-484.
    3. Saima Javaid & Suha Alalawi, 2018. "Performance and Profitability of Islamic Banks in Saudi Arabia: An Empirical Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(1), pages 38-51.
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