Bank Performance & Its Determinants : An Empirical Study

Abstract— Banks are the center of the economy that can encourage the progress of national and international
trade. The purpose of this study was to investigate the factors affecting the financial performance of the banking
sector in Indonesia. The study's dependent variable is return on assets (ROA), while the independent variables
are the capital adequacy ratio (CAR), operating expense ratio (OER), non-performing loan (NPL), and loan to
asset ratio (LAR). The object of this research is banking businesses in the banking industry that were listed
between 2018 and 2022 on the Indonesia Stock Exchange. This study used a nonprobability sampling with a
purposive sampling method, and the population consisted of 47 companies, with a total sample of 41 companies.
Multiple linear regression analysis is the data analysis method used in this study, and SPSS version 26 software
is used. The outcomes demonstrated that ROA was unaffected by CAR, positively and significantly impacted by
LAR, and negatively and significantly impacted by OER and NPL. This research is expected to provide benefits
as practical implications for companies and provide an illustration for other researchers to add other factors as
independent variables.