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The Impact Of Credit Risk On The Profitability Of Conventional Banks In Indonesia

Nur Intan Rahmawati, Indah Ayu Ningsih, Susy Muchtar

Abstract


This study aims to examine the effect of Non-Performing Loans on profitability, to examine the effect of Capital Adequacy Ratio on profitability, to examine the effect of Total Loan to Assets Ratio on profitability, and to examine the effect of Total Loan to Deposit Ratio on profitability. The approach used in this study is quantitative with secondary data obtained from the Indonesia Stock Exchange and annual reports of companies listed on the Indonesia Stock Exchange during the period 2018 to 2023. Based on this study, it is concluded that Non-Performing Loans have a significant negative effect on bank profitability. Capital Adequacy Ratio does not affect bank profitability. Total Loan to Asset Ratio does not affect bank profitability. Total Loan to Deposit Ratio also does not affect bank profitability.

Keywords


non performing loan; profitabilitas bank; capital adequacy ratio; total loan to asset ratio

References


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G. Anindiansyah, B. Sudiyatno, E. Puspitasari, and Y. Susilawati, "Pengaruh CAR, NPL, BOPO, dan LDR Terhadap ROA Dengan NIM Sebagai Variabel Intervening (Studi Pada Bank yang Go Publik di Bursa Efek Indonesia Periode Tahun 2015-2018)," Proceeding SENDIU, pp. 560-567, 2020.

A. H. Arifaj and B. H. Baruti, "The Effect of Credit Risk on The Financial Performance of Commercial Bank in Balkan Countries," Corporate & Business Strategy Review, vol. 4, no. 3, pp. 18-25, 2023. doi: https://doi.org/10.22495/cbsrv4i3art2.

H. M. Bandara, A. L. Jameel, and A. Haleem, "Credit Risk and Profitability of Banking Sector in Sri Lanka," Journal of Economics, Finance and Accounting Studies (JEFAS), vol. 3, no. 1, pp. 65-71, 2021. doi:10.32996.

D. T. Dung, Z. Salimi, T. H. Linh, N. M. Phuong, B. P. Anh, L. B. Xuan, and V. D. Thy, "Impact of Credit Risk Management on Profitability of Commercial Banks: A Case Study in Vietnam," Thu Dau Mot University Journal of Science, vol. 6, no. 03, pp. 432-443, 2024.

R. Ekinci and G. Poyraz, "The Effect of Credit Risk on Financial Performance of Deposit Banks in Turkey," ScienceDirect, pp. 979-987, 2019. doi:10.1016.

S. M. Henry and H. Ruslim, "Pengaruh Capital Adequacy Ratio, Non Performing Loan dan Loan to Deposit Ratio Terhadap Return on Equity," Jurnal Manajerial dan Kewirausahaan, vol. 4, no. 3, pp. 564–572, 2022.

A. Mahesta, "The Effect of Loan to Deposit Ratio (LDR) and Third Party Funds on Return On Equity (ROE) at PT Bank Rakyat Indonesia (Persero) Tbk Between 2012 and 2021," Indonesian Financial Review, vol. 2, no. 2, pp. 85-98, 2022.

G. Mithila and L. Kengatharan, "Impact of Credit Risks on Profitability of the Systematically Important Licensed Commercial Banks in Sri Lanka," South Asian Journal of Finance, vol. 4, no. 1, pp. 17-30, 2024. Retrieved from https://sajf.sljol.info/.

M. Naili and Y. Lahrichi, "The Determinants of Bank's Credit Risk: Review of The Literature and Future Research Agenda," International Journal of Finance & Economics, pp. 334-360, 2020.

S. Nabilah and S. Sutiman, "Pengaruh Loan to Deposit Ratio dan Non Performing Loan Terhadap Return on Equity Pada Bank Mega Tbk Periode 2013-2022," Neraca Manajemen Ekonomi, vol. 7, no. 11, pp. 1-12, 2024. doi:10.8734.

O. N. Nelson, "The Impact of Credit Risk Management on the Profitability of a Commercial Bank: The Case of BGFI Bank Congo," International Journal of Economics and Finance, vol. 12, no. 3, pp. 21-29, 2020. doi: URL: https://doi.org/10.5539/ijef.v12n3p21.

N. Nurfitria, A. A. Putri, H. S. Lestari, and F. M. Leon, "The Effect of Credit Risk Management on Financial Performance in Indonesian Banking," International Journal of Social Science and Human Research, vol. 6, no. 2, pp. 785-793, 2023. doi:10.47191.

O. Olalere, W. A. Omar, and S. Kamil, "Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Empirical Evidence from Nigeria," International Journal of Finance & Banking Studies, vol. 6, no. 1, pp. 25-38, 2017. doi: https://doi.org/10.20525/ijfbs.v6i1.627.

D. M. Rani and L. N. Zergaw, "Bank Specific, Industry Specific and Macroeconomic Determinants of Bank Profitability in Ethiopia," International Journal of Advanced Research in Management and Social Sciences, vol. 6, no. 3, pp. 74-96, 2017.

A. Anastasya and E. Susilowati, "Pengaruh Bank size, NIM dan CAR Terhadap Profitabilitas Periode 2015-2019," SENAPAN: Seminar Nasioal Akutansi Call for Paper UPN "Veteran" Jatim, vol. 1, no. 1, pp. 271–281, 2021.

G. Anindiansyah, B. Sudiyatno, E. Puspitasari, and Y. Susilawati, "Pengaruh CAR, NPL, BOPO, dan LDR Terhadap ROA Dengan NIM Sebagai Variabel Intervening (Studi Pada Bank yang Go Publik di Bursa Efek Indonesia Periode Tahun 2015-2018)," Proceeding SENDIU, pp. 560-567, 2020.

A. H. Arifaj and B. H. Baruti, "The Effect of Credit Risk on The Financial Performance of Commercial Bank in Balkan Countries," Corporate & Business Strategy Review, vol. 4, no. 3, pp. 18-25, 2023. doi: https://doi.org/10.22495/cbsrv4i3art2.

H. M. Bandara, A. L. Jameel, and A. Haleem, "Credit Risk and Profitability of Banking Sector in Sri Lanka," Journal of Economics, Finance and Accounting Studies (JEFAS), vol. 3, no. 1, pp. 65-71, 2021. doi:10.32996.

D. T. Dung, Z. Salimi, T. H. Linh, N. M. Phuong, B. P. Anh, L. B. Xuan, and V. D. Thy, "Impact of Credit Risk Management on Profitability of Commercial Banks: A Case Study in Vietnam," Thu Dau Mot University Journal of Science, vol. 6, no. 03, pp. 432-443, 2024.

R. Ekinci and G. Poyraz, "The Effect of Credit Risk on Financial Performance of Deposit Banks in Turkey," ScienceDirect, pp. 979-987, 2019. doi:10.1016.

S. M. Henry and H. Ruslim, "Pengaruh Capital Adequacy Ratio, Non Performing Loan dan Loan to Deposit Ratio Terhadap Return on Equity," Jurnal Manajerial dan Kewirausahaan, vol. 4, no. 3, pp. 564–572, 2022.

A. Mahesta, "The Effect of Loan to Deposit Ratio (LDR) and Third Party Funds on Return On Equity (ROE) at PT Bank Rakyat Indonesia (Persero) Tbk Between 2012 and 2021," Indonesian Financial Review, vol. 2, no. 2, pp. 85-98, 2022.

G. Mithila and L. Kengatharan, "Impact of Credit Risks on Profitability of the Systematically Important Licensed Commercial Banks in Sri Lanka," South Asian Journal of Finance, vol. 4, no. 1, pp. 17-30, 2024. Retrieved from https://sajf.sljol.info/.

M. Naili and Y. Lahrichi, "The Determinants of Bank's Credit Risk: Review of The Literature and Future Research Agenda," International Journal of Finance & Economics, pp. 334-360, 2020.

S. Nabilah and S. Sutiman, "Pengaruh Loan to Deposit Ratio dan Non Performing Loan Terhadap Return on Equity Pada Bank Mega Tbk Periode 2013-2022," Neraca Manajemen Ekonomi, vol. 7, no. 11, pp. 1-12, 2024. doi:10.8734.

O. N. Nelson, "The Impact of Credit Risk Management on the Profitability of a Commercial Bank: The Case of BGFI Bank Congo," International Journal of Economics and Finance, vol. 12, no. 3, pp. 21-29, 2020. doi: URL: https://doi.org/10.5539/ijef.v12n3p21.

N. Nurfitria, A. A. Putri, H. S. Lestari, and F. M. Leon, "The Effect of Credit Risk Management on Financial Performance in Indonesian Banking," International Journal of Social Science and Human Research, vol. 6, no. 2, pp. 785-793, 2023. doi:10.47191.

O. Olalere, W. A. Omar, and S. Kamil, "Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Empirical Evidence from Nigeria," International Journal of Finance & Banking Studies, vol. 6, no. 1, pp. 25-38, 2017. doi: https://doi.org/10.20525/ijfbs.v6i1.627.

D. M. Rani and L. N. Zergaw, "Bank Specific, Industry Specific and Macroeconomic Determinants of Bank Profitability in Ethiopia," International Journal of Advanced Research in Management and Social Sciences, vol. 6, no. 3, pp. 74-96, 2017.

I. Saleh and M. A. Afifa, "The effect of credit risk, liquidity risk and bank capital on bank profitability: Evidence from an emerging market," Cogent Economics & Finance, vol. 8, no. 1, pp. 1-13, 2020.

M. P. Satriandi, I. A. Yulia, and A. Pranamulia, "Pengaruh CAR, NPL, dan LDR Terhadap ROE Pada Perusahaan Perbankan yang Terdaftar di BEI Tahun 2023," Jurnal Ekonomi dan Manajemen Teknologi (EMT) KITA, vol. 8, no. 4, pp. 1337-1347, 2024. doi:10.35870.

M. P. Satriandi, I. A. Yulia, and A. Pranamulia, "Pengaruh CAR, NPL, dan LDR Terhadap ROE Pada Perusahaan Perbankan Yang Terdaftar di BEI Tahun 2023," Jurnal EMT KITA: Indonesian Journal for the Economics, Management and Technology, vol. 8, no. 4, pp. 1337-1347, 2024. Retrieved from 10.35870.

J. Serly, M. Juliani, A. Susanto, R. Candra, and Nolivia, "Determinant Analysis of Profitability of Conventional Commercial Banks Listed on The Indonesia Stock Exchange," Jurnal Mantik, vol. 6, no. 1, pp. 671-686, 2022.

K. Singh, "Performance and returns volatility of banks in India: public versus private sector," Journal of Economic and Administrative Sciences, pp. 1-20, 2024. doi:10.1108.

I. Saleh and M. A. Afifa, "The effect of credit risk, liquidity risk and bank capital on bank profitability: Evidence from an emerging market," Cogent Economics & Finance, vol. 8, no. 1, pp. 1-13, 2020.

M. P. Satriandi, I. A. Yulia, and A. Pranamulia, "Pengaruh CAR, NPL, dan LDR Terhadap ROE Pada Perusahaan Perbankan yang Terdaftar di BEI Tahun 2023," Jurnal Ekonomi dan Manajemen Teknologi (EMT) KITA, vol. 8, no. 4, pp. 1337-1347, 2024. doi:10.35870.

M. P. Satriandi, I. A. Yulia, and A. Pranamulia, "Pengaruh CAR, NPL, dan LDR Terhadap ROE Pada Perusahaan Perbankan Yang Terdaftar di BEI Tahun 2023," Jurnal EMT KITA: Indonesian Journal for the Economics, Management and Technology, vol. 8, no. 4, pp. 1337-1347, 2024. Retrieved from 10.35870.

J. Serly, M. Juliani, A. Susanto, R. Candra, and Nolivia, "Determinant Analysis of Profitability of Conventional Commercial Banks Listed on The Indonesia Stock Exchange," Jurnal Mantik, vol. 6, no. 1, pp. 671-686, 2022.

K. Singh, "Performance and returns volatility of banks in India: public versus private sector," Journal of Economic and Administrative Sciences, pp. 1-20, 2024. doi:10.1108.


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DOI: 10.33751/jhss.v9i2.11139

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