Does Loan to Deposit Ratio Affect Return on Asset? Evidence from State-owned Banks

Abstract

The purpose of this study was to determine the effect of Loan to Deposit Ratio (LDR) on Return on Assets (ROA). To support the research, a causal associative method with a quantitative approach was used. The study was conducted on state-owned banks listed on the Indonesia Stock Exchange for the period 2014-2021. The samples used in this study were 4 state-owned banks consisting of PT Bank Negara Indonesia (Persero) Tbk, PT Bank Rakyat Indonesia (Persero) Tbk, PT Bank Tabungan Negara (Persero) Tbk, and PT Bank Mandiri (Persero) Tbk. The data analysis technique uses simple linear regression, correlation coefficient, coefficient of determination, and hypothesis testing. The results showed that LDR did not affect ROA. So, the high profits obtained by state-owned banks come from income other than loan interest income. This research is expected to improve the financial performance of state-owned banks by still paying attention to the percentage of LDR to obtain maximum profit