The Effect Of Capital Adequacy Ratio, Loan Deposit Ratio, And Non-Performing Loan On Financial Performance With Credit Risk As An Intervening Variable In Banking Companies Listed On The Indonesia Stock Exchange In The 2021-2023 Period

Abstract

Competition in the banking industry is getting fiercer in this modern era. Rapid digitalization has opened
up opportunities for various types of financial institutions, both conventional and digital, to offer
increasingly diverse and innovative banking products and services. This increasingly tight competition has
a significant impact on banking financial performance. This study aims to determine whether the capital
adequacy ratio, loan-to-deposit ratio, and non-performing loans affect financial performance through credit
risk as an intervening variable in banking companies listed on the Indonesia Stock Exchange for the 2021-
2023 period. The research population is companies listed as banking companies on the Indonesia Stock
Exchange 2021-2023. The research sampling technique uses purposive sampling. The data collection
technique is secondary data from the annual report from the IDX website and the company website. The
data analysis technique uses quantitative data processed with Partial Least Square (SEM) assisted by
SmartPLS software. The results of the study show that the capital adequacy ratio and loan-to-deposit ratio
harm credit risk. Non-performing loans have a positive but insignificant effect on credit risk. Capital
adequacy ratio and credit risk have a positive but insignificant effect on financial performance. Loan to
deposit ratio and non-performing loans harm financial performance. Credit risk is unable to mediate the
effect of capital adequacy ratio, loan-to-deposit ratio, and non-performing loans on financial performance.