Impact of Non-Performing Loans, Loan to Deposit Ratio and Education Diverstiy on Firm Performance of Indonesia Banking Sectors

Abstract

The banking industry has a significant role in creating equity and supporting economic growth.
However, the quantity of banks is increasing day by day, creating a tight gap, where lowers the
performance of a bank because it is unable to compete in the market; so many banks are not healthy
and even financially unhealthy. This study aims to determine the effect of Non-Performing Loans,
education diversity and Loan to Deposit Ratio on Return on Assets in Conventional Banking listed on the
Indonesia Stock Exchange for the period 2015 to 2019 as per the geographical location, as the effect of
loans vary on the basis of geographical perspectives. The research method used in this study is
quantitative with panel data. The technique used was purposive sampling to obtain a sample of 33
companies from a population of 41 companies. The data analysis technique used in this research is
descriptive statistical analysis, the coefficient of determination test, the F test, and the t-test. Data
processing used SPSS 20. The results showed that the Non-Performing Loan, the Loan to Deposit Ratio
and education diversity simultaneously had a significant effect on Return on Assets. Partially, Non-
Performing Loans have a significant negative effect on Return on Assets, and the Loan to Deposit Ratio
has a significant positive effect on Return on Assets. The return on assets and effect of loan were found
to vary as per the geographical variations.