FACTORS AFFECTING CAPITAL ADEQUACY RATIO AT COMMERCIAL BANKS ON THE INDONESIA STOCK EXCHANGE

Abstract

Capital Adequacy Ratio (CAR) is one of the main indicators used to measure the level of security and financial stability of a bank. This research aims to analyze the factors that influence the Capital Adequacy Ratio in commercial banks listed on the Indonesia Stock Exchange. The data used is panel data from 2016 to 2020 which includes 20 commercial banks. The independent variables used in this research are Return on Equity (ROE), Net Interest Margin (NIM), Loan to Deposit Ratio (LDR), and Non-Performing Loans (NPL). The research results show that ROE and NIM have a significant influence on the Capital Adequacy Ratio. However, LDR and NPL do not have a significant influence on CAR. The implication of this research is the importance of credit risk management, asset management and liquidity management in maintaining bank capital adequacy levels.