Capital, Operational Efficiency And Credit Risk In The Banking Intermediation

Abstract

Regional Development Bank in Indonesia was established to accelerate the growth of the economy. But in reality the contribution of BPD to Gross Regional Domestic Product in 2014 was still relatively small. The aim of this study was to analyze the factors that affect the banking intermediation includecapital, operational efficiency, and credit risk. The methods used are descriptive and verificative, with secondary data from financial statements all over 26 Indonesian Regional Development Banks as a research object's units. Data analysis technique is the multiple linear regression, hypothesis testing while using t-test to examine the effect of partial variables and test-F to examine the effect of variables simultaneously with a significance level of 5 %.Based on the results it is concluded that partial CARand OEOIhave positive and significant effects on LDR. While the NPLshas negativeand significant effect on LDR. Simultaneously CAR, OEOI and NPLs significant effect on the LDR with level of influence of 12.8% and the remaining influenced by other factors not examined in this study

Comparative Study : Determinant On Banking Profitability Between Buku 4 And Buku 3 Bank In Indonesia

“…The main purpose of banks, reaching the maximum level of profitability inconducting its operational activities (Buchory, 2015). Profitability describes the company's ability to profit through all the capabilities of existing sources (Harahap, 2015).…”

“…Based on Bank Indonesia regulation, adequate ROA is above 1,25%. ROA will be used as a guide in measuring the profitability of banks by the Bank Indonesia as a banking supervisor, because ROA is an objective measurement method that is based on the data available to the bank about how banks have been managing the assets of the funds come from the public (Buchory, 2015). ROE is another financial ratio that refers to how much profit a company earned compared to the total amount of shareholder equity invested or found on the balance sheet.…”

“…Credit is the greatest asset investment and the largest source of revenue for banks. If the credit fails then the ability of banks to provide new loans will be limited (Buchory, 2015). Besides bank revenue derived from loan interest will decrease and banks should establish loan loss reserves and finally will reduce the bank's profitability.…”

“…Credit risk or credit quality of a bank is indicated by the Non Performing Loans (NPLs). Thus, NPLs can be used to measure the ability of banks to cover the risk of default of loan repayment by the debtor (Buchory, 2015). The indicators commonly used to measure the extent of intermediation by the banking system has been implemented is the ratio of Loans to Deposits Ratio (LDR).…”

“…The higher this ratio is, the better it means that the bank could carry out intermediation function optimally. Vice versa, the lower this ratio means the bank in carrying out its intermediary function is not optimal (Buchory, 2015).…”