The Influence of Capital Adequacy, Credit Risk, Liquidity, Operational Cost, Income Diversification, Firm Size and Ownership Structure on the Profitability of Bank

This research aimed to analyze the effect of capital adequacy, credit risk, liquidity, operational cost, income diversification, firm size and ownership structure on the bank’s profitability. The object of this research is the conventional commercial bank listed at the Indonesia Stock Exchange (Bursa Efek Indonesia/BEI) from 2011 to 2015. This research used a purposive sampling method, which resulting in 16 conventional commercial banks as the sample. The data used were secondary data using a documentary method obtained from BEI’s website and the Financial Services Authority (Otoritas Jasa Keuangan/OJK’s) website. This research used multiple linear regression models and IBM statistic SPSS 21.0 software for analyzing the data. The result showed that capital adequacy, credit risk, and liquidity have no significant effect on profitability. In contrast, income diversification and ownership structure bring significant positive effects on profitability. As opposed to previous items, the operational cost and firm size cause significant adverse effects on profitability.