THE ACCURACY OF PROFITABILITY DETERMINANTS FOR BANKING SECTOR IN INDONESIA

Abstract

This research is conducted in order to find out whether internal financial performance such as credit risk and liquidity risk as well as external determinant such as macro economy condition affecting commercial bank profitability. The data population is all commercial banks which are bank BUKU 1 and bank BUKU 4, listed in Indonesia Stock Exchange from the period 2015-2017. In addition, selected banks should publish its quarterly financial statement for three consecutive year, from 2015-2017. Finding of this research shows that credit risk proxied by NPL constitute a part of bank’s profitability determinant which resulted that NPL has negative significant effect toward ROA and ROE. While liquidity risk has positive insignificant effect towards ROA and ROE. Macroeconomic indicators have negative insignificant effect toward ROA and ROE.