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All Journal The Eastasouth Journal of Social Science and Humanities
Alia Rezki Amalia
Accounting Study Program, Faculty Economics and Business, State University of Makassar
Humanities Social Sciences

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The Dynamics of Non-Performing Loan and Liquidity in Driving Bank Profit Growth Muhammad Raihan Mubaraq; Alia Rezki Amalia
The Eastasouth Journal of Social Science and Humanities Vol. 4 No. 01 (2026): The Eastasouth Journal of Social Science and Humanities (ESSSH)
Publisher : Eastasouth Institute

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.58812/esssh.v4i01.1278

Abstract

Profit growth is one of the key indicators used to assess the financial performance and sustainability of banking institutions. Maintaining stable profit growth requires effective credit risk and liquidity management, which are commonly measured by Non-Performing Loan (NPL) and Loan to Deposit Ratio (LDR). However, previous studies have reported inconsistent findings regarding the influence of these variables on profit growth. Therefore, this study aims to examine the effect of NPL and LDR on the profit growth of banking companies listed on the Indonesia Stock Exchange (IDX). This research employed a quantitative approach using secondary data obtained from the annual financial statements of 32 banking companies during the 2021–2025 period, resulting in 160 firm-year observations. The sample was selected using a purposive sampling technique, while the data were analyzed using multiple linear regression with IBM SPSS Statistics version 26. The results indicate that NPL has a negative relationship with profit growth, whereas LDR has a positive relationship. However, both variables do not have a significant effect on profit growth either individually or simultaneously. Furthermore, the explanatory power of the model is relatively low, indicating that profit growth is influenced by other financial and macroeconomic factors beyond NPL and LDR. These findings suggest that maintaining credit quality and liquidity remains important, but banking management should also strengthen operational efficiency, capital management, and other financial strategies to achieve sustainable profit growth.
Co-Authors Muhammad Raihan Mubaraq