pdf The Role of Third-Party Funds in Moderating the Influence of NPM and CIR on ROA

Selfika Selfika; Nur Halim; Wiwiek Wiyiastuty

Authors

Selfika Selfika Universitas Muhammadiyah Kendari Author
Nur Halim Universitas Negeri Makassar Author
Wiwiek Wiyiastuty Univrsitas Muhammadiyah Kendari Author

Keywords:

Net Profit Margin, Cost to Income Ratio, Return on Assets, Third-Party Funds

Abstract

Research Objectives - This study aims to analyze the effect of Net Profit Margin (NPM) and Cost to Income Ratio (CIR) on Return on Assets (ROA) in the banking sector listed on the Indonesia Stock Exchange (IDX) during the period 2018-2022, as well as the role of Third-Party Funds (TPF) as a moderating variable.

Method - This research uses a correlational approach with secondary data from the financial statements of banking companies listed on the IDX for the period 2018-2022. Multiple linear regression analysis and Moderated Regression Analysis (MRA) with the Hayes (2022) approach are used to test the direct and moderating effects.

Research Findings - The results show that NPM has a positive and significant effect on ROA, while the Cost to Income Ratio (CIR) has a negative and significant effect on ROA. Furthermore, TPF was found to positively and significantly moderate the effect of NPM and CIR on ROA. This means that with higher levels of TPF, the positive effect of NPM on ROA becomes stronger, and the negative effect of CIR on ROA weakens.

Theory and Practical Implications - This study contributes theoretically by integrating the role of TPF as a moderator in the relationship between efficiency and profitability on bank asset performance. The policy implications suggest the importance of banks not only focusing on operational efficiency and profitability but also on managing and enhancing Third-Party Funds to optimize asset performance.

Novelty – This study provides novelty by examining the moderating role of Third-Party Funds (TPF) in analyzing the effects of Net Profit Margin (NPM) and Cost to Income Ratio (CIR) on Return on Assets (ROA) in the Indonesian banking sector, an area that has not been extensively explored in previous research.

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