The Effect of Bank Size, Leverage, and Loan to Deposit Ratio (LDR) on Bank Profitability

Firman Syarif

doi:10.55927/fjmr.v4i12.646

Authors

Firman Syarif Universitas Sumatera Utara

DOI:

https://doi.org/10.55927/fjmr.v4i12.646

Keywords:

Bank Size, Leverage, Loan-to-Deposit Ratio (LDR), Profitability, Return on Assets (ROA)

Abstract

This study aims to examine the impact of Bank Size, Leverage (Debt Ratio), and Loan-to- Deposit Ratio (LDR) on Bank Profitability, as proxied by Return on Assets (ROA), given inconsistencies in previous empirical findings. Secondary data from Indonesian banking companies from 2015–2019 were used and analyzed using the Random Effects Model (REM) regression method in EViews. The results of partial hypothesis testing indicate that Bank Size, Leverage, and LDR do not have a statistically significant effect on Return on Assets (ROA) (Probability > 0.05). This finding indicates that a bank's structural characteristics and risk/liquidity strategy have not been proven to be the main determinants of a bank's ability to generate profits from its assets during the period studied.

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