Social Sciences
3 years ago

Bank Size and Return on Equity Boost Capital Adequacy Ratios in Indonesia.

Jurnal Ekonomi
Factor Affecting the Capital Adequacy Ratio of Banks Listed in Indonesia Stock Exchange
Susy Muchtar Abdurrahman Setiawan

Paper Summary

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The study looked at factors affecting bank capital adequacy ratios in Indonesia. They analyzed data from 42 banks on the stock exchange from 2015-2019. Bank size and return on equity positively impact capital adequacy ratios, while loan ratios have a negative effect. Liquidity ratios and loan loss reserves do not affect capital adequacy ratios. The findings suggest that banks should increase assets, improve return on equity, and decrease loan ratios to lower the risk of bad credit.