The Relationship between Bank’s Credit Risk, Liquidity, and Capital Adequacy towards its Profitability in Indonesia
Rifqah Amaliah S1, Hafinaz Hasniyanti Hassan2
1Rifqah Amaliah S., Asia Pacific University of Technology and Innovation, School of Accounting, Finance and Quantitative Studies, Faculty of Business Management, Technology Park Malaysia, Bukit Jalil, Kuala Lumpur, Malaysia.
2Hafinaz Hasniyanti Hassan, Asia Pacific University of Technology and Innovation, School of Accounting, Finance and Quantitative Studies, Faculty of Business Management, Technology Park Malaysia, Bukit Jalil, Kuala Lumpur, Malaysia.
Manuscript received on 05 February 2019 | Revised Manuscript received on 11 February 2019 | Manuscript Published on 19 February 2019 | PP: 225-237 | Volume-7 Issue-5S January 2019 | Retrieval Number: ES2149017519/19©BEIESP
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: The purpose of this research is to analyze the relationship between bank’s credit risk, liquidity, and capital adequacy towards its profitability in Indonesia. The main indicators used in this research are Net Interest Margin, Return on Asset, Non-Performing Loan Ratio, Loan to Deposit Ratio, and Capital Adequacy Ratio. This research uses the data from publicly annual report of four state-owned banks in Indonesia during 10 years period (2007 to 2016). The data analysis is conducted by finding the significant relation and the degree to which the relation exists among variables. The result of the research shows that there is a significant relationship between dependent variable (NIM, ROA) and overall independent variables (NPLR, LDR, CAR) yet in a negative correlation.
Keywords: Profitability, Credit Risk, Liquidity, and Capital Adequacy.
Scope of the Article: e-governance, e-Commerce, e-business, e-Learning