Dhita Agiastia, Agung Slamet Prasetyo, Hasanah Setyowati, Lilik Ambarwati, Anwar Mutahir, Mohamad Mahsun, Muhammad Subkhan

THE INFLUENCE OF NON-PERFORMING LOANS (NPL), LOAN OF DEPOSIT RATIO (LDR), OPERATING COST OF OPERATING INCOME (BOPO), QUALITY OF EARNING ASSETS (KAP) AND CAPITAL ADEQUACY REQUIREMENT (CAR). EARNING ASSETS (KAP) AND MINIMUM CAPITAL ADEQUACY (KPMM) ON RETURN

Introduction

The influence of non-performing loans (npl), loan of deposit ratio (ldr), operating cost of operating income (bopo), quality of earning assets (kap) and capital adequacy requirement (car). Earning assets (kap) and minimum capital adequacy (kpmm) on return. Study analyzes NPL, LDR, BOPO, KAP, & CAR ratios on BPR's ROA profitability. CAR shows positive effect, NPL & BOPO negative, LDR & KAP insignificant. Key banking insights.

Abstract

This study aims to analyze how financial ratios in Bank Perekonomin Rakyat, namely Non-Performing Loan (NPL), Loan of Deposit Ratio (LDR), Operating Costs Operating Income (BOPO), Earning Asset Quality (KAP) and the influence of Minimum Capital Adequacy (CAR) affect the level of profitability projected from the Return of Asset (ROA) ratio. The sample in this study used purposive sampling method, namely the People's Economic Bank in Bantul Regency which is registered with the Financial Services Authority for the period 2020-2023. The secondary data used are publication reports obtained from accessing the Financial Services Authority website (www.ojk.go.id) which are then recorded into SPSS. The data analysis method uses a classic assumption test which includes normality test, multicollinearity test, autocorrelation test and heteroscedasticity test. The analysis tool technique is descriptive analysis and statistical analysis. The results showed that CAR has a positive and significant effect on ROA, NPL and BOPO have a negative and significant effect on ROA while LDR and KAP have an insignificant effect on ROA.

Review

The submitted paper aims to investigate the influence of several key financial ratios—Non-Performing Loans (NPL), Loan to Deposit Ratio (LDR), Operating Costs to Operating Income (BOPO), Quality of Earning Assets (KAP), and Capital Adequacy Ratio (CAR)—on the profitability (Return on Assets, ROA) of People's Economic Banks (BPRs). This topic is highly relevant given the critical role of BPRs in local economies and the ongoing need for sound financial management. Utilizing secondary data from BPRs in Bantul Regency registered with the Financial Services Authority (OJK) for the period 2020-2023, the study employs standard classical assumption tests and statistical analysis to examine these relationships. The study benefits from a clear objective and the application of established econometric methods, including classic assumption tests for normality, multicollinearity, autocorrelation, and heteroscedasticity, which lend credibility to its analytical approach. The focus on BPRs, a segment often overlooked compared to larger commercial banks, also adds value to the existing literature, providing insights into their specific operational dynamics during a recent economic period. However, the title is notably verbose and redundant, requiring significant abbreviation and clarification. While the abstract mentions "statistical analysis," explicitly stating the regression model (e.g., multiple linear regression) used to test the hypotheses would enhance methodological transparency. Furthermore, the absence of the precise number of BPRs included in the sample from Bantul Regency limits the ability to assess the study's statistical power and generalizability. Lastly, ensuring consistent terminology for financial ratios, such as CAR and KPMM, throughout the paper is crucial for clarity. The findings suggest that CAR has a positive and significant effect on ROA, while NPL and BOPO exert a negative and significant influence. Interestingly, LDR and KAP were found to have an insignificant effect on ROA, which warrants further exploration. These results provide valuable insights for BPR management, emphasizing the critical importance of maintaining adequate capital, controlling operating costs, and managing non-performing loans to ensure profitability. For regulators, these findings underscore areas that require closer monitoring. Future research could expand the geographical scope beyond Bantul, extend the time series, or delve deeper into why LDR and KAP did not show a significant impact, perhaps by investigating mediating or moderating variables or specific BPR characteristics not covered in this study.

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