FINANCIAL RATIO ANALYSIS OF BANKING LIQUIDITY LEVEL: A CASE STUDY AT SOE PERSERO BANKS IN INDONESIA

Abstract

Bigger CAR indicates that a bank has sufficient capital to support needs and to bear risks including credit risk. By having large capital, a bank can channel more credit. If credit increases, it will automatically increase the LDR. This research is a case study at SOE Persero Banks in Indonesia. The data used in this research are secondary data. The research population is the financial statements of Persero banks which include PT Bank Negara Indonesia Tbk, PT Bank Rakyat Indonesia Tbk, PT Bank Mandiri Tbk, and PT Bank Tabungan Negara Tbk; within a research period of 5 years from 2010-2014. Research sampling was carried out using the purposive sampling method. The method included the classical assumption test, multiple linear regression analysis and hypothesis testing. The research findings indicated that CAR and NPL partially have significant effect on LDR. Moreover, NIM partially has no significant effect on LDR. Then, CAR, NPL, and NIM simultaneously have significant effect on LDR.

Keywords

• Capital adequacy ratio
• non-performing loan
• net interest margin
• loan to deposit ratio