Determinant of bank performance in Indonesia evidence Rural Banks in Pekanbaru City

Agustin, H. and Azwirman,, Azwirman, and Yusrawati, Yusrawati Determinant of bank performance in Indonesia evidence Rural Banks in Pekanbaru City. In: UBAYA INTERNATIONAL ANNUAL SYMPOSIUM ON MANAGEMENT.

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Abstract

The purpose of study is to find out how big the financial ratios related to Non Performing Loan (NPL), Operating Expense to Operating Income (OEOI), Loan to Deposit Ratio (LDR), and Capital Adequacy Ratio (CAR) in terms of affecting profitability that occurred in rural banks in Pekanbaru City. A purposive sampling method based on certain criteria was used in this study. The result of the study showed the operational risks proxied through BOPO variables have a negative and significant impact on Return On Assets (ROA). Liquidity risk proxied through LDR variable has a positive and significant impact on the profitability of RB. This indicates that any increase in LDR is followed by increased profitability, where as the amount of credit disbursed increases, the income from such credit will increase so that the bank's ability to earn profit also increases.

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