The Influence of Credit Risk, Capital Adequacy Level and Operating Expense Ratio on Profitability at Rural Credit Banks in East Java

Abstract

This study aims to determine the effect of credit risk (NPL) on Profitability (ROA), Capital Adequacy level (CAR) on Profitability (ROA), Operating Expense Ratio (BOPO) on Profitability (ROA) at Rural Bank in East Java in 2023. The population in this study is Rural Banks (BPR) in East Java in 2023 as many as 325 BPR. The sample in this study was 187 BPR. Sampling technique in this study was conducted by purposive sampling technique. This research data is secondary data obtained from the I to IV quarter reports on the website of the Financial Services Authority (OJK). This study was conducted by testing the hypothesis which uses the t test to show the influence of the independent variable on the dependent variable based on the significance. The result of this study showed that partially NPL has no effect on Profitability (ROA) with a significance value of 0,445 > 0,05. CAR has no effect on Profitability (ROA)  with a significance value of 0,176 > 0,05. BOPO has a negative and significant effect with a significant effect with a significance value of 0,000 > 0,05.