FACTORS INFLUENCING BANKS CAPITAL ADEQUACY RATIO IN INDONESIAN BANKS: CASE STUDY AT COMMERCIAL BANK LISTED PERIOD 2010-2015
Abstract: Banks play a major
role in foresting the economy of a nation. It serves as an intermediary for
people with excess of money to the people in need of money. In carrying out its
function, banks must maintain the capital adequacy that is used to assess its
ability to bear risk that might occur. This research focuses on examining the
factors that influence Indonesian commercial banks capital adequacy ratio
(CAR). Fixed effect with least square dummy variable and 61 commercial banks as
sample is used in the research. The result shows that operating expense to
operating income ratio and total asset has a positive and significant influence
to CAR. NIM is shows positive relationship with CAR this variable is found to
be statistically significant. High level of capital will increase cash reserves
that can be used to extend credit and high solvency level will open greater
opportunities for the bank to improve its profitability. Conversely, low solvency
level will reduce the bank’s ability to improve profitability, reduce public
trust and affect its continuity.
Keywords: capital adequacy
ratio (Car), net interest margin (nim), operating expense to operating income
ratio (oeoi), total asset
Penulis: Franklin . Runtu,
David . Saerang, Sifrid . Pangemanan
Kode Jurnal: jpmanajemendd171031
