Capital adequacy of the banking industry in Indonesia
This study analyzes the relationship between credit risk and profitability on theÂ capital adequacy ratio (CAR) of commercial banks in Indonesia. The empiricalÂ model result shows that credit risk and profitability performance altogetherÂ significantly influence the capital adequacy ratio (CAR). Partially, the variablesÂ that significantly influence the CAR are the characteristics and complexity ofÂ the bank group. This study also suggests that the pace towards the long-termÂ balance is, in general, less than one year. Capital ratio in the banking industry isÂ 8%, indicating the bank has set aside to anticipate the impact of external factorsÂ as well as to comply with Bank Indonesia Regulation Number 15/12/PBI/2013.
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Economic Journal of Emerging Markets (EJEM)
ISSN 2086-3128 (print), ISSN 2502-180X (online)
Center for Economic Studies, Department of Economics,
Universitas Islam Indonesia, Indonesia.
EJEM by http://journal.uii.ac.id/JEP/ is licensed under a Creative Commons Attribution 4.0 International License.