Evaluation of the Effect of Firm Size, LDR, NPL, and BOPO on the Profitability of Conventional Commercial Banks in Indonesia for the 2021-2024 Period

Abstract

This study aims to evaluate the influence of Firm Size, Loan to Deposit Ratio (LDR), Non-Performing Loans (NPL), and Operating Expenses to Operating Income (BOPO) on profitability (Return on Assets) of conventional commercial banks in Indonesia for the period 2021-2024. The study population comprised all conventional commercial banks listed on the Indonesia Stock Exchange, with 30 banks selected as samples using a purposive sampling technique, resulting in 120 panel data observations. Secondary data, in the form of annual financial reports, was analyzed using panel data regression with the Random Effects Model (REM) as the selected estimation model. The results indicate that LDR has a positive and significant effect on ROA, while BOPO has a negative and significant effect on ROA. Firm Size and NPL did not significantly influence ROA. Simultaneously, all four independent variables were shown to have a significant effect on ROA. The Adjusted R-squared value was recorded at 91.29%, indicating the model's high capacity to explain variations in bank profitability. These findings confirm that operational efficiency and the credit intermediation function are the primary determinants of the profitability of conventional commercial banks in Indonesia.