The Effect of Operational Efficiency and Liquidity on Profitability in Conventional Banks Listed on the Indonesia Stock Exchange

Abstract

This study aims to analyze the effect of operational efficiency and liquidity on the profitability of conventional banks listed on the Indonesia Stock Exchange during the 2022–2024 period. This research employs a quantitative approach with an associative design using secondary data derived from annual financial reports. The sample consists of 26 conventional banks selected through purposive sampling, resulting in 76 observations after outlier testing. The variables analyzed include operational efficiency measured by BOPO, liquidity measured by LDR, and profitability measured by ROA. Data analysis is conducted using multiple linear regression with the assistance of SPSS version 25, supported by classical assumption tests and hypothesis testing. The results indicate that operational efficiency (BOPO) has a negative and significant effect on profitability (ROA), suggesting that higher operational costs reduce bank profitability. Liquidity (LDR) is found to have a positive and significant effect on profitability, indicating that effective credit distribution enhances bank earnings. Simultaneously, operational efficiency and liquidity significantly influence profitability, demonstrating their combined importance in determining financial performance. These findings highlight that efficient cost management and optimal liquidity levels are key factors in improving banking profitability.