The Effect of Capital Adequacy Ratio, Credit Distribution on Return on Assets with Non-Performing Loans as an Intervening Variable (Case Study on Rural Banks in South Sulawesi)

Abstract

The research objective to be achieved is to analyze the influence of the Capital Adequacy Ratio and credit distribution on Non-Performing Loans  and Return on Assets at Rural Banks in South Sulawesi. The influence of Non-Performing Loans on Return on Assets, the influence of Capital Adequacy Ratio on Return on Assets mediated by Non-Performing Loans, and analyzing the influence of Credit Distribution on Return on Assets through non-performing loans at Rural Banks in South Sulawesi. To apply this objective, a population was selected at the Rural Bank with a total of 80 observation periods. Data collection techniques were through documentation with data analysis techniques using path analysis. The research results show that capital adequacy (CAR) has a negative but significant influence on NPL, credit distribution (LDR) has a positive and significant influence on non-performing loans (NPL), capital adequacy (CAR) has a positive and significant influence on ROA, credit distribution (LDR) has a positive and significant influence on ROA. The results of the path analysis show that non-performing loans (NPL) have a negative and significant influence on ROA. From the results of the mediation test, it can be concluded that non-performing loans (NPL) can mediate the effect of CAR on ROA and can mediate the effect of LDR on ROA at Rural Credit Banks in South Sulawesi.