Maintain adequate capital reserves

Oct 13, 2025 by talynt.org 84 views

The Influence of Capital Adequacy Ratio (CAR), Operational Costs and Operating Income (BOPO), Loan Deposit Ratio (LDR) and Net Interest Margin (NIM) on Return on Assets (ROA) with Credit Risk Moderation at Commercial Banks Registered on the IDX

Introduction

The banking industry is a vital component of the economy, providing financial services to individuals, businesses, and governments. Commercial banks play a crucial role in facilitating economic growth by providing loans, accepting deposits, and managing risk. However, the banking industry is also subject to various risks, including credit risk, operational risk, and market risk. In this study, we aim to analyze the effect of Capital Adequacy Ratio (CAR), operational costs and operating income (BOPO), Loan Deposit Ratio (LDR), and Net Interest Margin (NIM) on Return on Assets (ROA) with credit risk as moderation variables at commercial banks registered on the Indonesia Stock Exchange (IDX).

Methodology

This study uses an associative causal approach with quantitative data. Secondary data was collected from the website www.idx.co.id. The population consisted of 35 commercial banks registered on the IDX in the 2012-2015 period, and all of these banks were used as samples, producing 140 observations. Data analysis was carried out using multiple linear regression analysis and residual tests.

Results

The results showed that simultaneously, there was an influence between CAR, BOPO, LDR, and NIM on ROA. However, partially, CAR and LDR have no significant effect on ROA. Meanwhile, Bopo has a negative but significant effect, and NIM shows a significant positive effect on ROA. In addition, credit risk (NPL) can moderate the relationship between CAR, BOPO, LDR, and NIM to ROA.

In-Depth Analysis

1. Capital Adequacy Ratio (CAR)

CAR is a measure of how much capital the bank has to cover the risk it faces. Although the CAR does not have a significant effect on ROA in this study, it is essential to note that having adequate capital reserves is crucial to maintain bank stability. High CAR should give confidence to stakeholders that banks can survive in poor financial situations, although their direct influence on financial performance is not seen in this data.

2. Operational Costs and Operating Income (BOPO)

BOPO is a ratio that measures bank operational efficiency. In this study, Bopo showed a significant negative effect on ROA. This shows that the higher the operating costs relative to operating income, the lower the ROA produced. Banks must try to reduce their operational costs in order to increase profitability. Efficiency in managing costs can be the key to increasing ROA.

3. Loan Deposit Ratio (LDR)

LDR measures the ratio between the amount of loan given and the total deposit owned. This study shows that LDR has no significant influence on ROA, although in theory, higher LDRs can reflect the use of more efficient deposits. In practice, LDRs that are too high can also show a greater risk of liquidity, which can affect the overall performance of the bank.

4. Net Interest Margin (NIM)

NIM is an important indicator of bank profitability, showing the difference between interest income received and interest costs paid. The discovery that NIM has a positive and significant influence on ROA shows that banks capable of managing flower spreads effectively tend to have higher profitability. NIM optimization must be the main focus of the bank to increase ROA.

5. Credit Risk Role (NPL)

Non-Performing Loans (NPL) or credit risk functions as a moderation in the relationship between these variables and ROA. This emphasizes the importance of good credit risk management. Banks that are able to control NPLs will be better in maintaining their financial performance, while maximizing the use of assets to make a profit.

Conclusion

Although some variables do not show direct effect on ROA, all the variables studied have relevance in the context of risk management and bank performance. In-depth understanding of the effect of these variables will help banks in formulating the right strategies to improve financial performance in the future.

Recommendations

Based on the findings of this study, we recommend that commercial banks registered on the IDX should:

Maintain adequate capital reserves: Banks should ensure that they have sufficient capital to cover potential risks and maintain stability.
Optimize operational costs: Banks should strive to reduce operational costs to increase profitability.
Manage credit risk effectively: Banks should implement effective credit risk management strategies to minimize the risk of non-performing loans.
Focus on NIM optimization: Banks should prioritize NIM optimization to increase profitability.
Monitor and analyze financial performance regularly: Banks should regularly monitor and analyze their financial performance to identify areas for improvement.

By implementing these recommendations, commercial banks registered on the IDX can improve their financial performance and maintain stability in the face of various risks.
Frequently Asked Questions (FAQs) on the Influence of Capital Adequacy Ratio (CAR), Operational Costs and Operating Income (BOPO), Loan Deposit Ratio (LDR) and Net Interest Margin (NIM) on Return on Assets (ROA) with Credit Risk Moderation at Commercial Banks Registered on the IDX

Q: What is the Capital Adequacy Ratio (CAR) and how does it affect Return on Assets (ROA)?

A: The Capital Adequacy Ratio (CAR) is a measure of how much capital a bank has to cover the risk it faces. Although the CAR does not have a significant effect on ROA in this study, it is essential to note that having adequate capital reserves is crucial to maintain bank stability.

Q: What is the Operational Costs and Operating Income (BOPO) ratio and how does it affect ROA?

A: The Operational Costs and Operating Income (BOPO) ratio measures bank operational efficiency. In this study, Bopo showed a significant negative effect on ROA, indicating that higher operating costs relative to operating income can lead to lower ROA.

Q: What is the Loan Deposit Ratio (LDR) and how does it affect ROA?

A: The Loan Deposit Ratio (LDR) measures the ratio between the amount of loan given and the total deposit owned. This study shows that LDR has no significant influence on ROA, although in theory, higher LDRs can reflect the use of more efficient deposits.

Q: What is the Net Interest Margin (NIM) and how does it affect ROA?

A: The Net Interest Margin (NIM) is an important indicator of bank profitability, showing the difference between interest income received and interest costs paid. The discovery that NIM has a positive and significant influence on ROA shows that banks capable of managing flower spreads effectively tend to have higher profitability.

Q: What is the role of credit risk in the relationship between these variables and ROA?

A: Non-Performing Loans (NPL) or credit risk functions as a moderation in the relationship between these variables and ROA. This emphasizes the importance of good credit risk management. Banks that are able to control NPLs will be better in maintaining their financial performance, while maximizing the use of assets to make a profit.

Q: What are the implications of this study for commercial banks registered on the IDX?

A: The findings of this study have several implications for commercial banks registered on the IDX. Banks should maintain adequate capital reserves, optimize operational costs, manage credit risk effectively, focus on NIM optimization, and monitor and analyze financial performance regularly.

Q: How can banks improve their financial performance based on the findings of this study?

A: Banks can improve their financial performance by implementing the recommendations outlined in this study, including maintaining adequate capital reserves, optimizing operational costs, managing credit risk effectively, focusing on NIM optimization, and monitoring and analyzing financial performance regularly.

Q: What are the limitations of this study?

A: This study has several limitations, including the use of secondary data, the limited sample size, and the focus on commercial banks registered on the IDX. Future studies can build on this research by using primary data, increasing the sample size, and exploring other types of banks.

Q: What are the future research directions based on the findings of this study?

A: Future research can build on this study by exploring other variables that affect ROA, such as liquidity risk, market risk, and operational risk. Additionally, future studies can examine the impact of regulatory changes on bank performance and explore the role of technology in improving bank efficiency and profitability.