Determinants of Return on Assets (ROA) in Banking Companies

Abstract

ABSTRACT

Purpose — This study aims to determine the Profitability Value of Indonesian Banking using the Return On Asset (ROA) approach.

Design/methodology/approach — The method used in this study uses a literature review system by reviewing 15 journals published from 2019-2024, focusing on the banking sector in Indonesia. Of the 15 journals, only 5 journals were selected for in-depth analysis related to their profitability values. Findings — From the results of the review of the 5 journals, it was found that there are several factors that influence Return On Asset (ROA) in Indonesian banking, including Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL) and Loan to Deposit Ratio (LDR).

Practical implications — Banking companies can optimize profitability by optimizing portfolios, developing products while still paying attention to risk and cost management.

Originality/value — From this literature review study, the Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL) and Loan to Deposit Ratio (LDR) which affect Return on Asset (ROA) from previous articles are examined.

Keywords — Return on Asset (ROA), Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL), Loan to Deposito Ratio (LDR)

Paper type — Literature study