The effect of npl, ldr, and cash ratio on roa through bopo as a mediating variable
A study on banks in indonesia
Keywords:
NPL, LDR, ROA, Cash Ratio, BOPOAbstract
This study aims to examine the direct effect of NPL, LDR, and Cash Ratio on profitability (ROA), and to analyze the role of Operating Costs to Operating Income (BOPO) as a mediating variable in the relationship between NPL and ROA at People's Economic Banks (BPR) in the Riau Islands Province. The method used is quantitative with panel data from all BPRs in the Riau Islands during the 2020-2024 period (N = 75 data). Data were analyzed using Panel Data Regression and Path Analysis to test the mediation hypothesis. The results showed that simultaneously NPL, LDR, and Cash Ratio had a significant effect on ROA. Partially, NPL and LDR had a significant negative effect on ROA, while Cash Ratio had a significant positive effect. The main finding is the role of BOPO which was proven to significantly mediate the relationship between NPL and ROA. An increase in NPL significantly worsened operational efficiency (increased BOPO), which in turn caused a sharp decline in BPR profitability (ROA).
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