Advances in Economics and Business Vol. 5(7), pp. 382 - 393
DOI: 10.13189/aeb.2017.050702
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The Influence of Risk Management to the Return on Asset (ROA) Banking Sector (Case Study of Bank in Indonesia Listed in Indonesia Stock Exchange)


Eddy Winarso 1,*, Imhmed Abdulgader Salim 2
1 Faculty of Economic, Widyatama University, Indonesia
2 Faculty of Economic and Accounting, Sebha University, Murzuq, Libya

ABSTRACT

As companies in general, commercial banks in the operational as well have a goal to be able to get the maximum profit. Therefore, banks must maintain its financial ratios adjusted for the decision of Bank Indonesia as well as maintain its performance in order to remain trusted by customers in the economic activities. This study aims to analyze the effect of Capital Adequacy Ratio (CAR), Loan to Deposit Ratio (LDR), Non-Performing Loan (NPL), Net Interest Margin (NIM) an Operating Expenses to Operating Income Ratio (OEOI) to the Return on Assets (ROA) of bank in Indonesia listed in Indonesia Stock Exchange in the period 2007 - 2011. 25 banks are investigated and 17 of them are chosen as samples.The analysis technique of this study used in this study is multiple linear regressions to obtain a comprehensive picture of the relationship between variables that one with the other variables. In addition, the hypothesis test used was the t-test statistic for testing the partial regression coefficient and test F-statistic for testing significance together with the significance level of 5%. The results of this study indicate that NPL and OEOI significantly and negatively related to ROA banking sector, CAR, LDR, and the NIM has non-significant impact on ROA in banking sector. The results of this study is expected that the variable CAR, LDR, NPL, NIM, and OEOI can used as guidelines for the management of banks in managing a bank in order to become a healthy bank.

KEYWORDS
Capital Adequacy Ratio (CAR), Loan to Deposit Ratio (LDR), Non-Performing Loan (NPL), Net Interest Margin (NIM), Operating Expense to Operating Income Ratio (OEOI) and Return on Assets (ROA)

Cite this paper
Eddy Winarso , Imhmed Abdulgader Salim . "The Influence of Risk Management to the Return on Asset (ROA) Banking Sector (Case Study of Bank in Indonesia Listed in Indonesia Stock Exchange)." Advances in Economics and Business 5.7 (2017) 382 - 393. doi: 10.13189/aeb.2017.050702.