THE EFFECT OF CREDIT RISK ON PROFITABILITY WITH CAPITAL ADEQUACY AS A MEDIATION VARIABLES

Abstract

This study aims to determine the relationship between credit risk and profitability through the capital adequacy ratio as a mediating variable. The population in this study is the Rural Bank (BPR) in Badung Regency which is registered with the Service Authority. The data in this research is secondary data. The data analysis technique used is Path Analysis. The results of this study found that credit risk has a negative and significant effect on profitability, credit risk has a positive and significant impact on capital adequacy, capital adequacy has a positive and significant impact on profitability. This research can provide information to become a consideration for banks in Indonesia to maintain standard provisions for financial ratios as indicated by Bank Indonesia.

Keywords

• credit risk
• capital adequacy ratio
• profitability