The Influence of Credit Risk, Liquidity Risk, and Capital Adequacy on Financial Performance in the Banking Sector Listed on the Indonesia Stock Exchange 2016-2020 Period: Before and During Covid-19
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Oct 18, 2022
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Abstract
Financial performance in a bank can be measured by return on assets. Return on assets can be used to measure the effectiveness of a company in achieving profits by utilizing its assets. This study aims to determine the effect of NPL, LDR, CAR, Bank Size, and BOPO on financial performance. This study also aims to determine the effect of the Covid-19 pandemic before and during the COVID-19 pandemic. This research was conducted on banking companies listed on the Indonesia Stock Exchange (IDX) for the period 2016 – 2020. The sample was determined using the purposive sampling method and the number of samples selected was 37 banks. The data collection used is secondary data. The data analysis technique used is Penel data regression analysis. The results of the analysis of this study indicate that the first hypothesis is found that credit risk has a negative and significant effect on financial performance. The second hypothesis finds that liquidity risk has a negative and insignificant effect on financial performance. And the third hypothesis is that it is found that capital has a negative and significant effect on financial performance. The results of the fourth test of the four control variables have a positive and significant effect on financial performance, the fifth hypothesis has a negative and significant effect on financial performance. Subsequent research results from 37 banks showed that CAR had differences in financial performance before and during the COVID-19 period, while NPL, LDR, Bank Size.
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How to Cite
Sari, L. F., Fany Alfarisi, & Fajri Adrianto. (2022). The Influence of Credit Risk, Liquidity Risk, and Capital Adequacy on Financial Performance in the Banking Sector Listed on the Indonesia Stock Exchange 2016-2020 Period: Before and During Covid-19. Enrichment : Journal of Management, 12(4), 2913-2917. https://doi.org/10.35335/enrichment.v12i4.755
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Weather, C., Simangunsong, I., Maharani, A., & Sari, IR (2020). The Influence of Capital Adequacy Ratio ( CAR ), Non Performing Loan ( NPL ), and Operating Costs Operating Income ( BOPO ) on Profitability in Banks Listed on the Indonesia Stock Exchange for the 2016-2018 Period. 2(5).
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Gabriel, O. (2019). Effect of Non-Performing Loans on the Financial Performance of Commercial Banks in Nigeria. 1(2), 1–9.
Hu, T., & Xie, C. (2016). Competition, Innovation, Risk-Taking, and Profitability in the Chinese Banking Sector: An Empirical Analysis Based on Structural Equation Modeling. Discrete Dynamics in Nature and Society, 2016. https://doi.org/10.1155/2016/3695379
Kasmir, Putranto, AA, Kristanti, FT, Putra, D., Mahardika, K., & Telkom, U. (2017). Capital Adequacy Ratio, Loan Deposit Ratio And Non. 9(2), 88–93.
Kusmayadi, D. (2018). Saudi Journal of Business and Management Studies ( SJBMS ) Analysis of Effect of Capital Adequacy Ratio , Loan to Deposit Ratio , Non Performing Loan , Bopo , and Size on Return on Assets in Rural Banks at Indonesia. 6663. https://doi.org/10.21276/sjbms.2018.3.7.4
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Nuryanto, UW, Salam, AF, Sari, RP, & Suleman, D. (2020). The Effect of Capital Adequacy Ratio, Liquidity, Credit Risk and Cost Efficiency on Profitability in Go Public Banks. 7(1), 1–9.
Perdana, H, Adrianto, F. (2020). Effect of Corporate Governance Mechanism, Capital Adequacy Ratio, and LDR on Banking Financial Performance (April 2020), https://scholar.google.com/scholar?hl=id&as_sdt=0%2C5&q=fajri+adrianto&btnG=&oq=
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Prasetyo, W. (2015). Analysis of Factors Affecting Banking Profitability. 7(1), 46–54.
Prastiyaningtyas, Mauliza, Scientific, J., & Economics, M. (2016). The Influence of Capital Adequacy and Competition on Profitability on Profitability of Islamic Banks in Indonesia, Dessy Mauliza 1 , Rulfah M. Daud Accounting Department, Syiah Kuala University, Banda Aceh. 1(1).
Ramadanti, F., & Meiranto, W. (2015). Profitability of Banking Companies in Indonesia. 4, 1–11.
Riftiasari, D., Bina, U., Informatics, S., Bina, U., & Informatics, S. (2020). Analysis of the Financial Performance of Conventional BCA and BCA Syariah Banks Due to the Impact of the Covid-19 Pandemic 33(2), 78–86.
Rudianto. (2020). The Impact of the Covid-19 Pandemic on the Performance of Property and Real Estate Companies listed on the IDX. 4(2), 133–141.
Setyarini, A. (2020). P- ISSN : 2550-0171 (Study on Regional Development Banks in Indonesia for the 2015-2018 Period) Research Fair Unisri 2019 P-ISSN : 2550-0171. 4(1), 282–290.
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Suminar. (2020). The Effect of Capital Adequacy Ratio (CAR), Loan To Deposit Ratio (LDR) And Non Performing Loan (NPL) Towards Return On Assets (ROA) In The Banking Sector In Indonesia Stock Exchange Effect Of Capital Adequacy Ratio (CAR), Loan To Deposit Ratio (LDR) ) D. 01(01).
Sunaryo, D. (2020). The Effect Of Capital Adequacy Ratio (CAR), Net Interest Margin (NIM), Non-Performing Loan (NPL), and Loan To Deposit Ratio (LDR) Against Return On Asset (ROA) In General Banks In Southeast Asia 2012-2018. 1(4), 149–158.
Taherinia, M., & Baqeri, A. (2018). The Effect of Capital Adequacy Ratio on the Ratio of the Bank Reserves Accepted in the Tehran Stock Exchange. 8(1), 161–167.
Tangngisalu, J., Hasanuddin, R., & Hala, Y. (2020). Effect of CAR and NPL on ROA : Empirical Study in Indonesia Banks. 7(6), 9–18. https://doi.org/10.13106/jafeb.2020.vol7.no6.009
Tiyas, W. &. (2015). Analysis of the Effect of Capital Adequacy, Liquidity, Credit Risk and Cost Efficiency. 2011, 99–109.
Vives, X. (2019). Competition and stability in modern banking: A post-crisis perspective. International Journal of Industrial Organization, 64, 55–69. https://doi.org/10.1016/j.ijindorg.2018.08.011
Zulfikar. (2016). The Effect of Non-Performing Loans (NPL) and Loan To Deposit Ratio (LDR) on Return On Assets ON (ROA) with Capital Adequacy Ratio (CAR) as Intervening Variables (Study on Commercial Banks Listed on the Stock Exchange for the Period of 2012-2015). 2(2), 28–47.
Ali, M., & Puah, CH (2019). The internal determinants of bank profitability and stability: An insight from the banking sector of Pakistan. Management Research Review, 42(1), 49–67. https://doi.org/10.1108/MRR-04-2017-0103
Weather, C., Simangunsong, I., Maharani, A., & Sari, IR (2020). The Influence of Capital Adequacy Ratio ( CAR ), Non Performing Loan ( NPL ), and Operating Costs Operating Income ( BOPO ) on Profitability in Banks Listed on the Indonesia Stock Exchange for the 2016-2018 Period. 2(5).
Dendawijaya, L. (2019). Analysis of the Effect of Loan To Deposit Ratio (Panca Satria Putra/Septi Juniarti).
Fahmi. (2018). Effect of Capital Adequacy Ratio, Non Performing Loan, Loan To Deposit Ratio on Return On Assets Faculty of Economics and Business Udayana University, Bali, Indonesia The economy as a whole benefits from the existence of a bank. According to. 7(5), 2410–2441.
Gabriel, O. (2019). Effect of Non-Performing Loans on the Financial Performance of Commercial Banks in Nigeria. 1(2), 1–9.
Hu, T., & Xie, C. (2016). Competition, Innovation, Risk-Taking, and Profitability in the Chinese Banking Sector: An Empirical Analysis Based on Structural Equation Modeling. Discrete Dynamics in Nature and Society, 2016. https://doi.org/10.1155/2016/3695379
Kasmir, Putranto, AA, Kristanti, FT, Putra, D., Mahardika, K., & Telkom, U. (2017). Capital Adequacy Ratio, Loan Deposit Ratio And Non. 9(2), 88–93.
Kusmayadi, D. (2018). Saudi Journal of Business and Management Studies ( SJBMS ) Analysis of Effect of Capital Adequacy Ratio , Loan to Deposit Ratio , Non Performing Loan , Bopo , and Size on Return on Assets in Rural Banks at Indonesia. 6663. https://doi.org/10.21276/sjbms.2018.3.7.4
Mandasari. (2018). No Title.
Nurhayati, Hanafi, & Agustini. (2017). Effect of Capital Adequacy and Credit Risk on Profitability: Liquidity as a Mediator at Rural Banks in Badung Regency, Faculty of Economics and Business, Udayana University (Unud), Bali, Indonesia INTRODUCTION decreased by 0, 2.6, 2161–2192.
Nuryanto, UW, Salam, AF, Sari, RP, & Suleman, D. (2020). The Effect of Capital Adequacy Ratio, Liquidity, Credit Risk and Cost Efficiency on Profitability in Go Public Banks. 7(1), 1–9.
Perdana, H, Adrianto, F. (2020). Effect of Corporate Governance Mechanism, Capital Adequacy Ratio, and LDR on Banking Financial Performance (April 2020), https://scholar.google.com/scholar?hl=id&as_sdt=0%2C5&q=fajri+adrianto&btnG=&oq=
Pessarossi, P., Thevenon, JL, & Weill, L. (2020). Does high profitability improve stability for European banks? Research in International Business and Finance, 53(July 2019), 101220. https://doi.org/10.1016/j.ribaf.2020.101220
Prasetyo, W. (2015). Analysis of Factors Affecting Banking Profitability. 7(1), 46–54.
Prastiyaningtyas, Mauliza, Scientific, J., & Economics, M. (2016). The Influence of Capital Adequacy and Competition on Profitability on Profitability of Islamic Banks in Indonesia, Dessy Mauliza 1 , Rulfah M. Daud Accounting Department, Syiah Kuala University, Banda Aceh. 1(1).
Ramadanti, F., & Meiranto, W. (2015). Profitability of Banking Companies in Indonesia. 4, 1–11.
Riftiasari, D., Bina, U., Informatics, S., Bina, U., & Informatics, S. (2020). Analysis of the Financial Performance of Conventional BCA and BCA Syariah Banks Due to the Impact of the Covid-19 Pandemic 33(2), 78–86.
Rudianto. (2020). The Impact of the Covid-19 Pandemic on the Performance of Property and Real Estate Companies listed on the IDX. 4(2), 133–141.
Setyarini, A. (2020). P- ISSN : 2550-0171 (Study on Regional Development Banks in Indonesia for the 2015-2018 Period) Research Fair Unisri 2019 P-ISSN : 2550-0171. 4(1), 282–290.
Su, S., Lee, H., Chou, J., & Chen, H. (2020). No Title. (3(02), 137–150.
Suminar. (2020). The Effect of Capital Adequacy Ratio (CAR), Loan To Deposit Ratio (LDR) And Non Performing Loan (NPL) Towards Return On Assets (ROA) In The Banking Sector In Indonesia Stock Exchange Effect Of Capital Adequacy Ratio (CAR), Loan To Deposit Ratio (LDR) ) D. 01(01).
Sunaryo, D. (2020). The Effect Of Capital Adequacy Ratio (CAR), Net Interest Margin (NIM), Non-Performing Loan (NPL), and Loan To Deposit Ratio (LDR) Against Return On Asset (ROA) In General Banks In Southeast Asia 2012-2018. 1(4), 149–158.
Taherinia, M., & Baqeri, A. (2018). The Effect of Capital Adequacy Ratio on the Ratio of the Bank Reserves Accepted in the Tehran Stock Exchange. 8(1), 161–167.
Tangngisalu, J., Hasanuddin, R., & Hala, Y. (2020). Effect of CAR and NPL on ROA : Empirical Study in Indonesia Banks. 7(6), 9–18. https://doi.org/10.13106/jafeb.2020.vol7.no6.009
Tiyas, W. &. (2015). Analysis of the Effect of Capital Adequacy, Liquidity, Credit Risk and Cost Efficiency. 2011, 99–109.
Vives, X. (2019). Competition and stability in modern banking: A post-crisis perspective. International Journal of Industrial Organization, 64, 55–69. https://doi.org/10.1016/j.ijindorg.2018.08.011
Zulfikar. (2016). The Effect of Non-Performing Loans (NPL) and Loan To Deposit Ratio (LDR) on Return On Assets ON (ROA) with Capital Adequacy Ratio (CAR) as Intervening Variables (Study on Commercial Banks Listed on the Stock Exchange for the Period of 2012-2015). 2(2), 28–47.