Abstract: Banks play an important role in the growth of economic stability because banks as the heart of a country's economy are able to make a major contribution to a country. Therefore, banks are required to always pay attention to their profitability. This research aims to find empirical evidence about the effect of the Loan to Deposit Ratio (LDR) and Capital Adequacy Ratio (CAR) on bank profitability with the proportion of independent commissioners as a moderating variable. Profitability in this study was proxy by using ROA. This research was conducted at banking companies listed on the Indonesia Stock Exchange in 2014-2018. The method of determining the sample is done by purposive sampling which produces a sample of 30 companies. The analysis technique used is moderated regression analysis and multiple linear regression analysis. The results showed the LDR has a positive effect on ROA. This means that the higher the LDR, the bank profitability will increase. CAR has a positive effect on ROA. This means that the higher the CAR, the bank's profitability to increase. The proportion of independent commissioner does not moderate the effect of LDR on ROA. This means that the number of independent commissioners does not affect the LDR as an effort to increase bank profitability. The proportion of independent commissioners does not moderate the effect of CAR on ROA. This means that the number of independent commissioners does not affect CAR as an effort to increase bank profitability.
Keywords: LDR, CAR, independent commisioners, ROA.
Title: The Effect of Loan to Deposit Ratio and Capital Adequacy Ratio on Bank Profitability with Proportion of Independent Commissioners as Moderating Variable
Author: Putu Bunga Maharani Wibawa Putri, I Made Sadha Suardikha
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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