The effect of liquidity risk, capital and third-party fund on bank performance with credit risk as intervening variable: Cases in conventional Bank in Indonesia
Purpose – this research examines the effect of liquidity risk as measured by the loan to deposit ratio (LDR), bank capital as measured by the capital adequacy ratio (CAR), credit risk as measured by non-performing loans (NPL) and third-party funds (TPF). on profitability as measured by return on as...
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| Language: | English |
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Universitas Islam Indonesia
2025-01-01
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| Series: | Jurnal Siasat Bisnis |
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| Online Access: | https://journal.uii.ac.id/JSB/article/view/36140 |
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| author | Sutrisno Sutrisno |
| author_facet | Sutrisno Sutrisno |
| author_sort | Sutrisno Sutrisno |
| collection | DOAJ |
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Purpose – this research examines the effect of liquidity risk as measured by the loan to deposit ratio (LDR), bank capital as measured by the capital adequacy ratio (CAR), credit risk as measured by non-performing loans (NPL) and third-party funds (TPF). on profitability as measured by return on assets (ROA). The research also tests whether credit risk can be an intervening variable in the influence of LDR, CAR and TPF on profitability
Design/methodology/approach – The population of this research is 42 conventional banks on the Indonesia Stock Exchange (BEI), with a sample of 24 banks taken using purposive sampling technique. The observation period is 4 years with quarterly data. Hypothesis testing uses multiple regression analysis tools with a significance level of 0.05
Findings – The research results show that liquidity risk has a significant positive effect on profitability, credit risk has a significant negative effect on profitability. Meanwhile, capital and third-party funds have no effect on profitability. Another result turns out that credit risk can only be an intervening variable in the influence of liquidity risk on profitability.
Research limitations/implications – This research only tested three independent variables and one intervening variable. Besides that, this research uses multiple regression analysis, so that future researchers can research further by adding variables that influence profitability and can use panel data regression analysis.
Practical implications – It is hoped this research can be used by bank management in its efforts to increase profitability by considering four variables that influence it and shows the role of credit risk in mediating the influence of independent variables on profitability.
Originality/value – The novelty in this research is including the role of credit risk as an intervening variable which is still rarely researched.
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| format | Article |
| id | doaj-art-eb9eeebda573498ca73b03c0a3dcd7db |
| institution | Kabale University |
| issn | 0853-7666 2528-7001 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Universitas Islam Indonesia |
| record_format | Article |
| series | Jurnal Siasat Bisnis |
| spelling | doaj-art-eb9eeebda573498ca73b03c0a3dcd7db2025-01-24T08:55:51ZengUniversitas Islam IndonesiaJurnal Siasat Bisnis0853-76662528-70012025-01-0129110.20885/jsb.vol29.iss1.art5The effect of liquidity risk, capital and third-party fund on bank performance with credit risk as intervening variable: Cases in conventional Bank in IndonesiaSutrisno Sutrisno0Department of Management, Universitas Islam Indonesia, Yogyakarta, Indonesia Purpose – this research examines the effect of liquidity risk as measured by the loan to deposit ratio (LDR), bank capital as measured by the capital adequacy ratio (CAR), credit risk as measured by non-performing loans (NPL) and third-party funds (TPF). on profitability as measured by return on assets (ROA). The research also tests whether credit risk can be an intervening variable in the influence of LDR, CAR and TPF on profitability Design/methodology/approach – The population of this research is 42 conventional banks on the Indonesia Stock Exchange (BEI), with a sample of 24 banks taken using purposive sampling technique. The observation period is 4 years with quarterly data. Hypothesis testing uses multiple regression analysis tools with a significance level of 0.05 Findings – The research results show that liquidity risk has a significant positive effect on profitability, credit risk has a significant negative effect on profitability. Meanwhile, capital and third-party funds have no effect on profitability. Another result turns out that credit risk can only be an intervening variable in the influence of liquidity risk on profitability. Research limitations/implications – This research only tested three independent variables and one intervening variable. Besides that, this research uses multiple regression analysis, so that future researchers can research further by adding variables that influence profitability and can use panel data regression analysis. Practical implications – It is hoped this research can be used by bank management in its efforts to increase profitability by considering four variables that influence it and shows the role of credit risk in mediating the influence of independent variables on profitability. Originality/value – The novelty in this research is including the role of credit risk as an intervening variable which is still rarely researched. https://journal.uii.ac.id/JSB/article/view/36140profitabilitycredit riskliquidity riskcapital adequacy ratiothird-party fund |
| spellingShingle | Sutrisno Sutrisno The effect of liquidity risk, capital and third-party fund on bank performance with credit risk as intervening variable: Cases in conventional Bank in Indonesia Jurnal Siasat Bisnis profitability credit risk liquidity risk capital adequacy ratio third-party fund |
| title | The effect of liquidity risk, capital and third-party fund on bank performance with credit risk as intervening variable: Cases in conventional Bank in Indonesia |
| title_full | The effect of liquidity risk, capital and third-party fund on bank performance with credit risk as intervening variable: Cases in conventional Bank in Indonesia |
| title_fullStr | The effect of liquidity risk, capital and third-party fund on bank performance with credit risk as intervening variable: Cases in conventional Bank in Indonesia |
| title_full_unstemmed | The effect of liquidity risk, capital and third-party fund on bank performance with credit risk as intervening variable: Cases in conventional Bank in Indonesia |
| title_short | The effect of liquidity risk, capital and third-party fund on bank performance with credit risk as intervening variable: Cases in conventional Bank in Indonesia |
| title_sort | effect of liquidity risk capital and third party fund on bank performance with credit risk as intervening variable cases in conventional bank in indonesia |
| topic | profitability credit risk liquidity risk capital adequacy ratio third-party fund |
| url | https://journal.uii.ac.id/JSB/article/view/36140 |
| work_keys_str_mv | AT sutrisnosutrisno theeffectofliquidityriskcapitalandthirdpartyfundonbankperformancewithcreditriskasinterveningvariablecasesinconventionalbankinindonesia AT sutrisnosutrisno effectofliquidityriskcapitalandthirdpartyfundonbankperformancewithcreditriskasinterveningvariablecasesinconventionalbankinindonesia |