The Effect of Capital Adequacy Ratio (CAR), Non Performing Loan (NPL), Operational Efficiency (BOPO), Net Interest Margin (NIM), and Loan to Deposit Ratio (LDR), on Return on Assets (ROA)

Abstract

This study aimed to examine the effect of Capital Adequacy Ratio (CAR), Non- Performing Loan (NPL), Operating Efficiency (BOPO), Net Interest Margin (NIM), and Loan to Deposit Ratio (LDR) on Return on Assets (ROA).The population used in this study was Private Foreign Exchange National Bank in Indonesia that listed on Indonesia Stock Exchange (IDX) in 2013-2016. By using Purposive Sampling method, it could be obtained 44 samples of 15 banking companies which observed in 2013-2016. The analysis technique employed was Panel Data Regression. Research findings indicated that Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL), Operational Efficiency (BOPO), Net Interest Margin (NIM), and Loan to Deposit Ratio (LDR) simultaneously had effect on Return on Assets (ROA). Then, partial test of each variables were CAR and LDR had not significant effect on ROA, while NPL, BOPO, and NIM have significant effect on ROA.

Keywords: ROA, CAR, NPL, BOPO, NIM, and LDR

DOI: 10.7176/RJFA/10-10-19

Publication date:May 31^st 2019