Research Paper
Year: 2020 | Month: April | Volume: 7 | Issue: 4 | Pages: 52-64
Panel Regression of Cashflow Operation and Efficiency Ratio to Profitability: Empirical Study of Banking in Indonesia
Irawan
Universitas Pembangunan Panca Budi, Department of Management, Faculty of Social Sciences Medan, North Sumatera, Indonesia
ABSTRACT
This study aimed to find out (1) the impact of cash flow operations on commercial banks ROA in Indonesia for the period 2014-2017, (2) the impact of BOPO on commercial banks ROA in Indonesia for the period 2014-2017, (3) the impact of DER on the ROA of commercial banks in Indonesia the period 2014-2017, (4) the impact of cash flow operation, BOPO, and DER on the ROA of commercial banks in Indonesia for the period 2014-2017. The present study type is an associative quantitative study. The population of this research is commercial banks in Indonesia for the period 2014-2017 which are listed on the Indonesian Stock Exchange. The sample was taken using purposive sampling technique which was obtained by 30 public bank companies in Indonesia using quarterly period data, which research data were analyzed totaling 480 data.
The data collection method used is documentation. The data analysis techniques used are panel data regression analysis statistics. Based on the model selection test using chow and thirst test, the best model is determined by fixed effect model. Hypothesis testing using t-test, concluded that cash flow operation is related positive but not significantly to ROA, BOPO is related negative and significantly to ROA, DER is related positive and significantly to ROA. Based on the F-test it was concluded that simultaneous cash flow operation, BOPO, and DER had a significant impact on the ROA of Indonesian commercial banks in 2014-2017. The banking company should minimize its operating expenses and maximize its operating income. This is because lowering BOPO will significantly increase ROA. Companies are advised to minimize their expenditures and as not to increase DER and to create credit that can be used as an operating income for the bank. Therefore, as more and more third-party savings can be channeled into credit then the bank will get more returns.
Keywords: CashFlow Operation, BOPO, DER, ROA, Panel Regression
[PDF Full Text]