Correspondence to : nilta.alfi16198@student.unsika.ac.id Received: Sep, 29, 2020 Revised: Oct, 17, 2020 Accepted: Dec, 18, 2020 JURNAL AKUNTANSI, MANAJEMEN DAN EKONOMI Vol.22, No. 4, pp. 16 - 25 Published online in http://jos.unsoed.ac.id/index.php/jame ISSN: 1410-9336 / E-ISSN: 2620-8482 INTRODUCTION In the current era of globalization, it is the most important role of financial institutions, namely banks. The main function of banks in general is to collect funds from the public and distribute them back to the public for various purposes, therefore public trust is a major factor in running the banking business. In today's global era, the banking industry is one of the fastest growing industries. Based on data from the Bank. In Indonesia, through its official account, it can be seen that the growth of loans extended by banks reached 11.7% (year on year), higher than the realization of credit growth in the previous year of 8.2% (year on year). Currently, the banking sector has faced various problems, one of which is Bank Indonesia raising interest rates. The increase in interest rates will affect the banking business and also affect economic growth. In fact, economic growth greatly affects demand for credit. When economic growth is weak, demand for credit will weaken. The increase in credit interest caused banks to face an increase in the ratio of non-performing loans (NPL). Another problem, liquidity management. If you look at the loan to deposit ratio (LDR), almost all banks face tight liquidity. An increase in interest rates will increase deposit rates, so that people are willing to deposit their funds in banks. The Financial Services Authority (OJK) said that the profitability ratio of assets (Return on Assets / RoA) in the banking industry during 2016 decreased slightly. According to the Director of Finance, the decrease in ROA was due to slow credit growth coupled with an increase in NPL, with an increase in NPL that required banks to pay more reserves for losses. It is important for management to pay attention to the amount of ROA that is owned in order to measure the effectiveness of the company in generating profits by utilizing its assets. ROA is the ratio between profit after tax to total assets. The greater the ROA, the better the financial performance, because the rate of return (return) is getting bigger. If ROA increases, it means that the company's profitability increases so that the final impact is an increase in profitability enjoyed by shareholders. The standard reference for determining ROA in banks in Indonesia is at least 1.5% as stipulated in SE BI No.13 / 24 / DPNP / 2011. Non Performing Loans (NPL) and Loan to Deposits Ratio (LDR) are ratios that are often used to measure profitability, which are financial ratios related to credit risk. The Effect Of Non Performing Loan (NPL) And Loan To Deposit Ratio (LDR) On Return On Assets () Nilta Alfi Rizqi1, Nasution2 1,2 Universitas Singaperbangsa Karawang, Indonesia Abstract This study aims to determine whether there is an effect of Non Performing Loans and Loan To Deposit Ratio on Return On Assets partially or simultaneously. The method used in this research is descriptive verification method with a quantitative approach which is sourced from the annual financial statements of state-owned banks and private banks and literature studies. The sampling technique was using purposive sampling technique. The data used are secondary data analyzed through descriptive analysis and verification of the validity of multiple linear regression test data and hypotheses using the T test and F test coefficient of determination. This study uses the SPSS version 22 software program to process data. The results of this study indicate that partially non-performing loans have a significant negative effect on Return on Assets and the Loan to Deposit ratio has no effect on Return on Assets. Meanwhile, simultaneously the Non Performing Loan and the Loan To Deposit Ratio simultaneously have a significant effect on Return On Assets Keywords Non Performing Loan, Loan To Deposit Ratio, Return On Asset mailto:nilta.alfi16198@student.unsika.ac.id JURNAL AKUNTANSI, MANAJEMEN DAN EKONOMI , Vol. 22, No. 4, 2020, pp. 16 - 25 100. 00% 90.0 0% 80.0 0% 70.0 0% 60.0 0% 50.0 0% 40.0 0% 30.0 0% 20.0 0% 10.0 0% NPL LDR ROA Non Performing Loan (NPL) is the level of credit risk in a bank, where this ratio shows the ratio of the number of non-performing loans to total credit. In this regard, NPL is credit extended by banks, and customers cannot make installments or payments according to the agreement agreed between the customer and the bank. The amount of NPL allowed by Bank Indonesia is currently a maximum of 5%. In this study, the liquidity ratio used is the Loan to Deposit Ratio (LDR). Loan to Deposits Ratio (LDR) is an indicator to measure the ability of a bank to pay back withdrawals made by customers using credit as a source of liquidity, where this ratio shows the ratio between total loans and total third party funds. It is important for management to pay attention to the percentage of the LDR ratio in order to remain within the safe limit set by Bank Indonesia. The current Loan to Deposits Ratio (LDR) is 94%, which is a fairly healthy bank in terms of LDR. The higher the LDR ratio, the higher the profit, with the increase in bank profit, the performance in a bank will also increase. Thus it can be concluded that the size of the LDR ratio will affect performance in banking. In this study, the authors chose the Banking Industry, especially state-owned banks and private banks listed on the Indonesia Stock Exchange for the 2014-2018 period. The following is a table listing the average NPL, LDR and ROA developments in banking companies listed on the Indonesian Stock Exchange for the period 2014-2018. Figure 1. Average Development of NPL, LDR and ROA of banking companies listed on the Indonesia Stock Exchange for the period 2014-2018 Based on the data above, it is known that every year from 2014 to 2018 the average Return on Assets (ROA) in Indonesia for banking companies tends to decline. The ROA value in 2014 was 2.85% and decreased in 2015 by 2.32%. Then there was a decline again in 2016 of 2.23%, but in 2017 it increased by 2.45%. Then there was an increase again in 2018 of 2.55%. The asset quality ratio used in this study is the Non Performing Loan (NPL). The NPL was chosen because the amount of this NPL can show the level of risk in a bank. It can be seen from the average value of development above, indicating that NPL moves in the opposite direction to Return On Assets (ROA), where when NPL increased in 2017, this was not followed by a decrease in ROA in the same year. This contradicts the theory, if the NPL goes up, the ROA will decrease, because the higher the NPL value, the worse the credit quality, and there is a fear that it will experience bad credit. According to Bank Indonesia standards, NPLs are said to be healthy as having a percentage of <5%, while NPLs with a percentage of> 5% are said to be unhealthy. This NPL will affect the level of credit to be extended by the bank. Meanwhile, the liquidity ratio used by the authors in this study is the Loan to Deposit Ratio (LDR). LDR was chosen because it is based on a theory which states that the higher the LDR level, the higher the bank's profit, meaning that the amount of LDR channeled by a bank indicates that the bank's management has the ability to market its funds. As can be seen above, the average Loan to Deposit Ratio value tends to increase. 2017 shows that LDR moves against ROA, where when LDR increases, this is not followed by an increase in ROA in the same year. This contradicts the theory, if the LDR increases, the ROA will increase. From the data above, it shows that the LDR has increased and decreased fluctuating every year. According to Bank Indonesia standards, the lower limit for LDR is 80% and the upper limit for LDR is 94%. Based on research conducted by Septiani and Lestari (2016), it shows that Non- Performing Loans (NPL) have a significant and negative effect on Return On Assets (ROA). The results of this study are in accordance with research conducted by Sudiarta and Putri (2015) which shows that Non-Performing Loans (NPL) have a significant effect on Return On Assets (ROA). However, it is different from Ali and Laksono's JURNAL AKUNTANSI, MANAJEMEN DAN EKONOMI , Vol. 22, No. 4, 2020, pp. 16 - 25 research (2017) which shows that Non- Performing Loans (NPL) have no effect on Return On Assets (ROA). Then research on Loan to Deposit Ratio (LDR) to Return On Assets (ROA) also shows various results including, the results of research conducted by Sudiarta and Putri (2015) show that LDR has a positive effect on profitability (ROA). The results of this study are in accordance with research conducted by Septiani and Lestari (2016) that the LDR has a significant and positive effect on ROA. However, it is different from the research conducted by Edwar (2016) which shows that LDR has no effect on ROA. Return On Asset (ROA) According to Kasmir (2014) ROA is a ratio that shows the results (return) on the total assets used in the company. In addition, ROA provides a better measure of the company's profitability because it shows the effectiveness of management in using assets to generate revenue. High profits make the bank gain the trust of the public which allows the bank to raise more capital so that the bank has a wider opportunity to lend funds. The Return On Asset (ROA) formula is: ROA= (Profit After Tax)/(Total Assets) x 100% Non Performing Loan (NPL) Non Performing Loans (NPL) is the ratio of credit risk which shows the ratio of the number of non-performing loans to total loans. According to Ismail (2014), non- performing loans are loans that have been disbursed by banks, and customers cannot make payments or make installments in accordance with the agreements signed by the bank and the customer. The Non Performing Loan (NPL) formula is: NPL= (total Non Performing Loans )/(Total Credits) x 100% Loan to Deposit Ratio (LDR) According to Kasmir (2014) states that "Loan to Deposit Ratio is a ratio to measure the composition of the amount of credit given compared to the amount of public funds and capital used". Liquidity is a ratio to measure a bank's ability to meet its short-term obligations when they are collected. In other words, it can pay back the disbursement of depositors' funds when they are collected and can meet the credit requests that have been submitted (Kasmir, 2014). The Loan to Deposit Ratio formula is: LDR=(total Credits )/(Total DPK) x 100% Conceptual Framework This is the conceptual framework in this research : Figure 2. Conceptual framework Research Hypothesis This is the hypothesis in this research H1: There is an effect of Non performing Loan (NPL) on Return On Assets (ROA). H2: There is an effect of Non performing Loan (NPL) on Return On Assets (ROA) H3: There is an effect of Non performing Loan (NPL) and Loan to Deposits Ratio (LDR) on Return On Asset (ROA) METHODS This type of research method is quantitative research. The type of data used in this study is secondary data. According to (Sugiyono, 2017), secondary data is a source of data that is not directly given to researchers. Secondary data comes from the financial statements of sub sector Banking and real estate companies listed on the Indonesian Stock Exchange (website: www.idx.co.id). The sampling technique used in this research was purposive sampling. According to (Sugiyono, 2017), purposive sampling is a technique in determining samples with certain criteria. In this research, the criteria set are companies listed on the Indonesian Stock Exchange from 2015-2018 period. Companies that publish consecutive financial statements from 2014-2018 period. Commercial banks that have gone public and have been listed on the Indonesia Stock Exchange and have consistently operated for 2014 - 2018 period, Commercial banks that publish audited annual financial reports and JURNAL AKUNTANSI, MANAJEMEN DAN EKONOMI , Vol. 22, No. 4, 2020, pp. 16 - 25 do not have complete data related to the variables studied during research period 2014 - 2018. Commercial banks that experience losses in succession participated during the 2014 - 2018 research period. So the total sample selection in this study is 67 samples Data Analysis Technique Normality Test The purpose of the normality test is to determine whether the data in the resulting regression equation is normally distributed or not. The regression equation can be said to be good if it has data on the independent variables and the dependent variable is distributed close to normal or not at all normal (Ghozali, 2016). According to (Ghozali, 2016: 156-158), other than that the Normality test can be seen in the Kolmogorov-Smirnov test, where the guidelines used in making this decision are If the significant value > 0.05 then the normal distribution and if the significant value < 0.05 then the distribution is not normal. Multicollinearity Test The purpose of the multicollinearity test is to test whether the regression model finds a correlation between independent variables (independent), a good regression model should not have a correlation between the independent variables, if the dependent variables are correlated, then the variable is not orgonal. The orgonal variable is an independent variable whose correlation value between independent variables is equal to 0 (zero) (Ghozali, 2016) The basis for the decision making for the Multicollinearity Test is: Looking at the tolerance value, if the Tolerance value is> 0.10 then Multicollinearity does not occur Looking at the VIF value, if the VIF value is <10.00 then multicollinearity does not occur. Heteroscedasticity Test The heteroscedasticity test aims to test whether in the regression model there is an inequality of variance from the residuals of one observation to another. If the residual variance from one observation to another is constant, it is called homoscedasticity and if it is different it is called heteroscedasticity. The basis for the decision to be tested for heteroscedasticity by using the scattler plot test. The scattler plot test uses the following criteria: The data points spread over and below or around the 0 Data points do not collect only above or below. The distribution of data points should not form a wavy pattern that widens then narrows and widened again. The distribution of data points is not patterned. Autocorrelation Test Autocorrelation test appears in regressions that use scaled data or time series. A good model must be free from autocorrelation. The autocorrelation test that is widely used is the Durbin-Watson vvvvmodel. If there is a correlation, it is called an autocorrelation problem. Decision making whether there is autocorrelation or not (Sujarweni, 2016), namely: D-W numbers below -2 means there is positive autocorrelation. The D-W number between -2 and +2 means there is no autocorrelation Figures D-w above +2 have negative autocorrelation Multiple Linear Regression Analysis To determine the effect of the independent variables with the variables used the multiple linear analysis formula as follows: Y = β + β1X1 + β2X2 + ε The statement as follows: Y : Return On Asset (ROA) β : Constanta β1. β2. : Regression X1 : Non Performing Loan (NPL) X2 : Loan to Deposit Ratio (LDR) ε : Standard error Coefficient Of Determination (R2) The coefficient of determination (R2) basically measures how far the model's ability to explain the dependent variables. The coefficient of determination is between zero and one (0 F table, then Ho is rejected and Ha is accepted, which means that all independent variables have an effect on the value of the dependent variable. If F count 0.05 then H0 is accepted and Ha is rejected Sig. <0.05, then H0 is rejected and Ha is accepted Criteria for decision making If t count> t table then H0 is rejected and Ha is accepted If t Ftable is obtained, namely 10.165> 3.14, which means that the Non-Performing Loan and the Loan to Deposit Ratio simultaneously affect the Return on Assets of State-Owned Banks and Private Banks listed on the Indonesia Stock Exchange for the 2015-2018 period. Partial Hypothesis Testing (t-Test) Based on the results of data processing with the SPSS program, the t-Test results can be obtained as follows: Table 7. Results of t-Test Model Unstand ardized Coefficients Standard ized Coefficients t Sig. B Std. Error Beta 1(Const ant) 4,714 . 1,348 3,497 .001 NPL -,476 ,109 -,476 -4,367 .000 LDR -,015 ,015 -,108 -,991 .325 Non Performing Loan variable has a tcount - 4.367 with a significant value of 0.000. While the table is 1.99773 with a significant value 0.05. Thus t table> tcount is -4.376 <1.99773, so that partially non-performing loans have a negative effect on Return on Assets at state- owned banks and private banks listed on the Indonesia Stock Exchange for the 2015-2018 period. The variable Loan to Deposit ratio has a tcount of -0.991 with a significant value of 0.325. While t table is 1.99773 with a significant value of 0.05. Thus, t table