The Effect of Lending, Third-party Funds, and Company Size on Profitability of Banking Companies Listed on IDX

ABSTRACT: Banking performance is an important part of the infrastructure for formulating strong macroeconomic and monetary policies at the national level in terms of the level of profitability that can be generated. This study aims to analyze the effect of lending, third-party funds, and company size simultaneously and partially on profitability. Profitability can be measured by calculating the bank’s financial performance ratio from the financial statements published every year. The data analysis technique used in this study is multiple linear regression analysis using SPSS on 38 companies selected through the purposive sampling method. The results of this study indicate that lending, third-party funds, and company size have a positive effect on the profitability of banking sector companies for the 2016-2020 period listed on the Indonesia Stock Exchange  (IDX). The theoretical implication of this research is to provide empirical evidence that this research is following agency theory which explains the relationship between agent and principal in the form of the nexus of contract cooperation. Meanwhile, the practical implications of this research are a consideration for investors and other related parties in making decisions based on profitability.
KEYWORDS: Lending, Third-party Funds, Company Size, Profitability