Analysis of Capital Adequacy Ratio, Prime Lending Rate, and Third-Party Funds on Profitability of Commercial Banks in Indonesia, With Liquidity as Intervening Variable

This study aims to determine the effect of Capital Adequacy Ratio, Prime Lending Rate, and Third-Party Funds on Profitability of Commercial Bank with Liquidity as an intervening variable. The sample of this research is the banks of the BUKU IV category listed in Bank of Indonesia and its financial statements published by the Indonesia Financial Services Authority (OJK) period 2009-2018, using a cluster sampling method. There are 5 banks of the BUKU IV category as the samples. Hypothesis testing using path analysis technique. The results of this research show that Capital has a positive and significant effect on Liquidity, Third-Party Funds (bank deposits) and Prime Lending Rate has a negative and significant efect on Liquidity. Thus Third-Party Funds has a positive effect on Profitability, then Capital and Liquidity have a negative effect on Profitability, meanwhile, Prime Lending Rate does not affect Profitability. The implication of this research that the liquidity policy is a determining variable acting as an important intermediary for linking Capital Policy, interest rates, and Third-Party Funds in order to increase bank profits.