THE EFFECT OF CAPITAL ADEQUACY RATIO AND CORPORATE GOVERNANCE ON BANKING FINANCIAL PERFORMANCE WITH OPERATIONAL EFFICIENCY AS A MODERATING VARIABLE

Abstract

This study examines the effect of Capital Adequacy Ratio (CAR) and Corporate Governance on the financial performance of banking companies listed on the Indonesia Stock Exchange (IDX), with operational efficiency as a moderating variable. The study uses a quantitative approach and secondary data obtained from annual reports of banking companies for 2020–2025. Purposive sampling was applied, and the data were analyzed using Moderated Regression Analysis (MRA) with SPSS 24. Financial performance is measured by Return on Assets (ROA), CAR by the ratio of bank capital to Risk-Weighted Assets, Corporate Governance through the Board of Commissioners, Board of Directors, and Audit Committee, and operational efficiency through the Operating Expenses to Operating Income ratio (BOPO). The results show that CAR significantly affects financial performance, while the Corporate Governance mechanisms represented by the Board of Commissioners, Board of Directors, and Audit Committee have a positive and significant relationship with financial performance. Operational efficiency significantly moderates the relationship between CAR and financial performance, with higher BOPO weakening the relationship. However, operational efficiency does not significantly moderate the relationship between Corporate Governance and financial performance. The findings highlight the importance of maintaining adequate capital, effective governance, and operational cost control in banking management.

Keywords: Capital Adequacy Ratio, Corporate Governance, Financial Performance, Operational Efficiency, BOPO, ROA