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Journal : Journal of Accounting Science

Non-Performing Loans and Operating Expenses Impact on Capital Adequacy Ratio Estiasih, Soffia Pudji; Noerchoidah, Noerchoidah; Nurdina, Nurdina; Putra, Andhika Cahyono
Journal of Accounting Science Vol. 8 No. 2 (2024): July
Publisher : Universitas Muhammadiyah Sidoarjo

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21070/jas.v8i2.1840

Abstract

General Background: Banks are pivotal to economic development, serving as financial intermediaries that facilitate capital flow between savers and borrowers. Their financial health is often assessed using ratios like the Capital Adequacy Ratio (CAR), Non-Performing Loans (NPL), and Operating Expenses to Operating Income (OEOI). Specific Background: The CAR indicates a bank's ability to withstand potential losses, making it a critical measure of financial stability. The relationship between NPL, OEOI, and CAR, with Return on Equity (ROE) as a moderating variable, remains underexplored, particularly in the context of Indonesian commercial banks. Knowledge Gap: Previous studies have inadequately addressed how ROE moderates the effects of NPL and OEOI on CAR. Aims: This study aims to examine the interactions between NPL and OEOI on CAR, moderated by ROE, using data from 30 commercial banks listed on the Indonesian Stock Exchange from 2018 to 2020. Results: The findings reveal that NPL significantly negatively impacts CAR, while OEOI's effect is negative but insignificant. ROE moderates the impact of OEOI on CAR significantly but not NPL. Novelty: This study introduces ROE as a moderating variable, providing a nuanced understanding of its differential effects on CAR in the Indonesian banking sector. Implications: The results offer practical insights for bank management to optimize financial performance and contribute theoretically to the literature on banking stability and profitability. These findings can inform future research and decision-making in the financial industry.
Co-Authors Abas, Ibnu Adi Sutrisni Agusta Dian Ellina Aji Prasetyo, Aji Alfia, Nida Aminundin, Aminundin Andhika Cahyono Putra Aprin Rusmawati Ardhiani, Mutiara Rachma Ariprabowo, Tri Aristha Purwanthari sawitri Assidiq, Muhammad Ati, Felomene Dian Sulistyananing Atik Setiawan Wahyuningsih Bayu Adi Bayu Rama Laksono Benny Yoga Satria Byba Melda Suhita Cahyani, Amelia Ayu Riska Cahyono M. Wijanarko, Dwi Christina Menuk Sri Handayani Edi Sulistyawan Estiasih, Soffia Pudji Ety Diana Sulistyawati Fachrudy Asj’ari Farah Tifanny Aisyah Anindya Putri Fazrin, Intan Ferry Hariawan Firdausia, Yuli Kurnia Fitria, Anjar Resti Frisyanto, Balqis Khairunisa Gustira, Dias Hadi Santoso Hari Rachmawati Harli, Kurnia I Made Bagus Dwiarta Indah Ayu Avilia Indarti, Daru Indasah Ira Nurdiana Joko Prasetyo Katmini Kusuma Wardani, Lingga Latif, Nashrudin Lestari, Iriyanti Ayu Malairu, Hildegardis Indah R Mayta Sari Dwianggimawati Miranti Moch Munir Rachman Mochklas, Mochamad Mohammad Afrizal Miradji MULYADI Munir Rachman Nashrudin Latif Nashrudin Latif Nelsent Oiyan Dimas Karyoto noer choidah Noerchoidah Nur Khalilah Nurwijayanti Nurwijyanti Nurwijyanti Pangestu, Septiawan Rizky Pety Merita Sari Purwasih, Yefi Putri, Nabila Maulidya R Yudi Sidharta Ratna Wardani Ridha Rachmathiany Rossitika, Amanda Rizky Sandu Siyoto Santika, I Made Setyo Wahyudi Sidharta, R. Yudi Sidharta, Yudi Sigit Prihanto Utomo Silviana Anggraini Ardya Putri Siti, Patimah Solihin Solihin Sri Rezeki Pettalolo Sugiati Sugiati Suhardiyah, Martha Suharyanto Sukandani, Yuni Syarli, Syarli Titin Susiyanti Tri Ariprabowo Wabula, Irfan Widhayani Puri S Widiar Onny Kurniawan Yessi Irvina Tombokan Yoga Satria , Benny Yuli Peristiowati, Yuli Yuliani Ningsih Yulianti, Desak Made Yuly Periostiawati Yuly Peristiowati