THE ANALYSIS THE INFLUENCE OF PROFITABILITY AND LIQUIDITY TOWARD CAPITAL ADEQUACY RATIO (A CASE STUDY OF INDONESIA'S COMMERCIAL BANKS FROM Q1 2011 TO Q3 2014)

Abstract

The research was purposely conducted in order to analyze the influence of Profitability and Liquidity toward Capital Adequacy Ratio of three Indonesia Commercial Banks from 2011 to third quarter of 2014. Specifically, researcher uses Net Interest Margin (NIM) and Return on Asset (ROA) as measurements for Profitability; Non-performing Loan (NPL) and Loan to Deposit Ratio (LDR) as measurement for Liquidity. Researcher have used data from three banks which being named in the top-performing list of Indonesia‟s banking industry as PT Bank Central of Asia tbk, PT Bank Danamon Indonesia tbk, PT Bank CIMB Niaga tbk. Research is applied Quantitative Method to analyze the influence of independent variables toward dependent variable. Data used in this research is secondary data that obtained from quarterly reports of chosen banks. As more convenient in analyzing the effect of independent variable on dependent variable, researcher has implemented multiple linear regression models. After testing hypothesis, there are empirical evidences shows that NIM, ROA, NPL and LDR all simultaneously affect Capital Adequacy Ratio (CAR). However, only NIM, NPL and LDR have partial significant influence towards CAR, the other ROA has been recognized not have partial influence towards CAR.