THE INFLUENCE OF CREDIT RISK, CAPITAL ADEQUACY AND OPERATIONAL EFFICIENCY ON THE PROFITABILITY OF BANKS LISTED ON THE INDONESIAN STOCK EXCHANGE

The purpose of this research is to determine and analyse the effect of credit risk, capital adequacy level and operational efficiency on the profitability of banking companies listed on the Indonesia Stock Exchange in 2019-2021. This study is a type of quantitative research that uses a descriptive design. In this study, researchers used secondary data obtained from the financial statements of banking companies. Researchers obtained a population of 46 banking companies listed on the Indonesia Stock Exchange in 2019-2021. The sampling technique uses initial public offering (IPO) sampling, which is a purposive method. Based on the sample characteristics, the authors found 31 banking companies with 93 financial data respondents. The data analysis technique is multiple linear regression using SPSS version 25. The results of this study indicate that credit risk has a negative and significant effect on profitability, capital adequacy has a positive and significant effect on profitability, operational efficiency has a negative and significant effect on profitability. Credit risk, capital adequacy and operational efficiency together have a significant effect on profitability. The result of the coefficient of determination (R2) of 0.627 shows that 62.7% of the variation in the adjusted R-squared is explained by variations in the factors Credit Risk (X1), Capital Adequacy (X2), Operational Efficiency (X3). While the remaining 37.3% is influenced by other unobserved factors affecting the profitability variable (Y). Therefore, further research using other variables is needed.