THE ROLE OF CAPITAL ADEQUACY RATIO (CAR) IN CONTROLLING LIQUIDITY RISK AND CREDIT RISK, SO ABOUT PROFITABILITY IMPROVEMENTS

Abstract

Abstract This study aims to determine the effect of capital adequacy ratio (CAR) on profitability. This research was conducted on a sample of 10 Islamic Commercial Banks registered with the Financial Services Authority (OJK) in the 2010-2020 period. This study uses path analysis with SPSS 26 application. The results of this study indicate that CAR is not able to directly increase profitability, but CAR has a negative effect on liquidity risk and credit risk. This study also found that credit risk has a negative effect on Profitability, but Liquidity Risk has no effect on Profitability.Keywords: Capital Adequacy Ratio, Liquidity Risk, Profitability