EXPLORING HOW NON-PERFORMING LOAN, NET INTEREST MARGIN, LOAN TO DEPOSIT RATIO, LIQUIDITY COVERAGE RATIO AND CAPITAL ADEQUACY RATIO RELATE TO RETURN ON ASSET IN 19 INDONESIAN COMMERCIAL BANKS FROM 2005-2014

Nowadays, banking industry is growing rapidly, especially in Indonesia. There are so many banks spread across Indonesia. It makes tight competition among banks. Banks have two main business activities, there are raising funds and accepting credit/loans. From these two main activities, banks earn inc...

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Main Author: Putra Pratama Sofyan, Yuvizar
Format: Final Project
Language:Indonesia
Online Access:https://digilib.itb.ac.id/gdl/view/72459
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Institution: Institut Teknologi Bandung
Language: Indonesia
id id-itb.:72459
spelling id-itb.:724592023-03-24T11:20:38ZEXPLORING HOW NON-PERFORMING LOAN, NET INTEREST MARGIN, LOAN TO DEPOSIT RATIO, LIQUIDITY COVERAGE RATIO AND CAPITAL ADEQUACY RATIO RELATE TO RETURN ON ASSET IN 19 INDONESIAN COMMERCIAL BANKS FROM 2005-2014 Putra Pratama Sofyan, Yuvizar Indonesia Final Project Banks, Profitability, Relationship, Return On Asset INSTITUT TEKNOLOGI BANDUNG https://digilib.itb.ac.id/gdl/view/72459 Nowadays, banking industry is growing rapidly, especially in Indonesia. There are so many banks spread across Indonesia. It makes tight competition among banks. Banks have two main business activities, there are raising funds and accepting credit/loans. From these two main activities, banks earn income or often called interest margin. Interest margin is the gap between the interest income that received by bank and the interest cost of its borrowed funds (Rose & Hudgins, 2010). The primary goal of bank is generating profits. However, it is not easy to generate profits due to several problems and risks that faced by bank in running its business. Therefore, this research aims to reveal the relationships of aspects in bank business activities that represented by Non- Performing Loan, Net Interest Margin, Loan to Deposit Ratio, Liquidity Coverage Ratio, and Capital Adequacy Ratio toward Return On Asset as the determinant of profitability. The data of this research obtained from the monthly reports of 19 Indonesian commercial banks that categorized in Bank Umum Kegiatan Usaha (BUKU) 3 and BUKU 4 from 2005 to 2014.BUKU III is banks which have capital between five to thirty trillion rupiah and BUKU IV has capital more than thirty trillion rupiah. The research is conducted using panel data regression with fixed effect method to know which variables that have relationship toward Return On Asset. The results indicate that Net Interest Margin, Non-Performing Loan, Loan to Deposit Ratio, and Capital Adequacy Ratio have significant effect toward Return On Asset. But in contrary, only Liquidity Coverage Ratio has no significant effect toward Return On Asset. Furthermore, Net Interest Margin, Capital Adequacy Ratio, and Liquidity Coverage Ratio have positive relationship toward Return On Asset, while Non- Performing Loan and Loan to Deposit Ratio have relate negatively toward Return On Asset. Banks should consider several aspects such as loans, third party funds, high quality liquid asset, and capital in order to earn bigger profits. text
institution Institut Teknologi Bandung
building Institut Teknologi Bandung Library
continent Asia
country Indonesia
Indonesia
content_provider Institut Teknologi Bandung
collection Digital ITB
language Indonesia
description Nowadays, banking industry is growing rapidly, especially in Indonesia. There are so many banks spread across Indonesia. It makes tight competition among banks. Banks have two main business activities, there are raising funds and accepting credit/loans. From these two main activities, banks earn income or often called interest margin. Interest margin is the gap between the interest income that received by bank and the interest cost of its borrowed funds (Rose & Hudgins, 2010). The primary goal of bank is generating profits. However, it is not easy to generate profits due to several problems and risks that faced by bank in running its business. Therefore, this research aims to reveal the relationships of aspects in bank business activities that represented by Non- Performing Loan, Net Interest Margin, Loan to Deposit Ratio, Liquidity Coverage Ratio, and Capital Adequacy Ratio toward Return On Asset as the determinant of profitability. The data of this research obtained from the monthly reports of 19 Indonesian commercial banks that categorized in Bank Umum Kegiatan Usaha (BUKU) 3 and BUKU 4 from 2005 to 2014.BUKU III is banks which have capital between five to thirty trillion rupiah and BUKU IV has capital more than thirty trillion rupiah. The research is conducted using panel data regression with fixed effect method to know which variables that have relationship toward Return On Asset. The results indicate that Net Interest Margin, Non-Performing Loan, Loan to Deposit Ratio, and Capital Adequacy Ratio have significant effect toward Return On Asset. But in contrary, only Liquidity Coverage Ratio has no significant effect toward Return On Asset. Furthermore, Net Interest Margin, Capital Adequacy Ratio, and Liquidity Coverage Ratio have positive relationship toward Return On Asset, while Non- Performing Loan and Loan to Deposit Ratio have relate negatively toward Return On Asset. Banks should consider several aspects such as loans, third party funds, high quality liquid asset, and capital in order to earn bigger profits.
format Final Project
author Putra Pratama Sofyan, Yuvizar
spellingShingle Putra Pratama Sofyan, Yuvizar
EXPLORING HOW NON-PERFORMING LOAN, NET INTEREST MARGIN, LOAN TO DEPOSIT RATIO, LIQUIDITY COVERAGE RATIO AND CAPITAL ADEQUACY RATIO RELATE TO RETURN ON ASSET IN 19 INDONESIAN COMMERCIAL BANKS FROM 2005-2014
author_facet Putra Pratama Sofyan, Yuvizar
author_sort Putra Pratama Sofyan, Yuvizar
title EXPLORING HOW NON-PERFORMING LOAN, NET INTEREST MARGIN, LOAN TO DEPOSIT RATIO, LIQUIDITY COVERAGE RATIO AND CAPITAL ADEQUACY RATIO RELATE TO RETURN ON ASSET IN 19 INDONESIAN COMMERCIAL BANKS FROM 2005-2014
title_short EXPLORING HOW NON-PERFORMING LOAN, NET INTEREST MARGIN, LOAN TO DEPOSIT RATIO, LIQUIDITY COVERAGE RATIO AND CAPITAL ADEQUACY RATIO RELATE TO RETURN ON ASSET IN 19 INDONESIAN COMMERCIAL BANKS FROM 2005-2014
title_full EXPLORING HOW NON-PERFORMING LOAN, NET INTEREST MARGIN, LOAN TO DEPOSIT RATIO, LIQUIDITY COVERAGE RATIO AND CAPITAL ADEQUACY RATIO RELATE TO RETURN ON ASSET IN 19 INDONESIAN COMMERCIAL BANKS FROM 2005-2014
title_fullStr EXPLORING HOW NON-PERFORMING LOAN, NET INTEREST MARGIN, LOAN TO DEPOSIT RATIO, LIQUIDITY COVERAGE RATIO AND CAPITAL ADEQUACY RATIO RELATE TO RETURN ON ASSET IN 19 INDONESIAN COMMERCIAL BANKS FROM 2005-2014
title_full_unstemmed EXPLORING HOW NON-PERFORMING LOAN, NET INTEREST MARGIN, LOAN TO DEPOSIT RATIO, LIQUIDITY COVERAGE RATIO AND CAPITAL ADEQUACY RATIO RELATE TO RETURN ON ASSET IN 19 INDONESIAN COMMERCIAL BANKS FROM 2005-2014
title_sort exploring how non-performing loan, net interest margin, loan to deposit ratio, liquidity coverage ratio and capital adequacy ratio relate to return on asset in 19 indonesian commercial banks from 2005-2014
url https://digilib.itb.ac.id/gdl/view/72459
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