DETERMINANTS OF BANK PROFITABILITY EVIDENCE FROM CONVENTIONAL COMMERCIAL BANKS LISTED ON IDX

Adittiya Aditt

doi:10.21009/JRMSI.17.2.2

Authors

Adittiya Aditt Universitas Swadaya Gunung Jati Cirebon

DOI:

https://doi.org/10.21009/JRMSI.17.2.2

Keywords:

Profitability, Financial Management, Banking

Abstract

Financial ratios such as OER, CAR, LDR, and NPL are evaluated in relation to ROA in this research. The panel data regression technique covers the years 2022-2024. The Fixed Effects Model (FEM) is adopted as the primary estimation method due to its optimal adaptation to the nature of the applied data. Data were gathered from 34 conventional commercial banks selected via a purposive sampling method involving an elimination process. Although LDR and NPL exerted no substantial effect on ROA, evidence from the data reveals that CAR and OER do influence it. Nonetheless, when all four variables are incorporated simultaneously, a significant effect on ROA is observed. These findings underscore that operational efficiency and capital adequacy serve as key drivers of bank profitability across the examined timeframe, whereas liquidity and credit risk indicators exhibit minimal direct influence on the banks' financial performance

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