ANALYSIS OF THE INFLUENCE OF ASSET QUALITY, LIQUIDITY, AND CAPITAL ON PROFITABILITY (Empirical Study on Islamic Commercial Banks

: This study is to analyze whether there is an effect of Asset Quality, Liquidity, and Capital on Profitability. Objects taken for this research are Islamic Commercial Banks whose financial reports can be accessed and viewed by each official website of Islamic banks registered with the Financial Services Authority (OJK) for the period 2015 to 2019. This study uses 6 Islamic commercial banks with sample selection using purposive sampling method. The results of this study indicate that Asset Quality has a negative regression coefficient and a significant value smaller than alpha, so it can be said that Asset Quality has a significant effect on profitability. Meanwhile, liquidity has a negative regression coefficient with a significant value greater than alpha, so it can be said that liquidity has no significant effect on profitability.


Introduction
Bank is basically an entity that collects funds from the public in the form of financing. In the banking system there are two kinds of operational systems, namely conventional banks and Islamic banks (Sharia Bank). In Islamic banking, financing is carried out based on Islamic principles and laws that do not contain gharar, maysir, usury, injustice and unlawful objects.
Currently, banking in Indonesia is entering a very competitive period of competition. This is due to the large number of banks operating in Indonesia, both operating locally and operating on an international scale. With increasingly competitive competition in the banking world, banks have begun to increase their competitive advantage to provide the best service to their customers through various banking products such as fund products, loan products or other service products (Rahmani, 2017).
Bank profitability is considered to be under pressure during the period 2014 to 2015 and is expected to continue in 2016. One of the consequences is that banking performance in the first quarter of 2015 slowed down compared to the previous period. Based on a report released by the Deposit Insurance Corporation (LPS) in early May 2015, credit growth and third party funds (DPK) declined in the two-month period. The trend of banking profit growth is also still declining (www.republika.co.id).
Asset quality in this study is related to NPF which reflects financing risk. The higher this risk indicates the quality of Islamic bank financing is getting worse. Financing management is very much needed by banks, considering that in Islamic banks the financing function is the  -20,13 -9,51 5,50 -6,86 -7,75 Profitability (ROA) at Islamic Commercial Banks in Indonesia for the 2015-2019 period can be influenced by several factors, but in this study the aim is to analyze the effect of asset quality (NPF), liquidity (FDR), and capital (CAR) on profitability (ROA).
Based on the above background, the researchers are interested in conducting research with the title "Analysis of The Influence of Asset Quality, Liquidity, and Capital on Profitability (Empirical Study on Islamic Commercial Banks 2015-2019 period)."

Literature review Agency Theory
According to Muhyiddin (2007), the word profit in Arabic is ribh, meaning the results obtained from commerce or trade. The meaning of the word ribh is not far from what linguists say, namely kasb (profit). Ribh means additional that is generated from commerce. In other words, the additional capital generated through commerce after deducting costs.
The Islamic Fiqh Academy defines ribh as, "Additional to capital and not income, income or yield." The rate of ribh (profit) can be determined by determining the value of the project in money. The addition that is in the capital when the assessment and calculation is carried out is called ribh or profit.
The law in seeking profit through commerce is permissible in Islam. Even in Islam commerce is highly recommended with the aim of protecting capital so that it does not decrease or run out due to payments or other costs.

Islamic Banking
Banks are basically entities that collect funds from the public in the form of financing or in other words carry out financial intermediation functions. In the banking system in Indonesia, there are two kinds of banking operational systems, namely conventional banks and Islamic banks. According to Law No. 21 of 2008 concerning Islamic Banking, Islamic Bank or Sharia Banks are banks that carry out business activities based on sharia principles, or Islamic legal principles regulated in the fatwa of the Indonesian Ulema Council such as the principles of justice and balance ('adl wa tawazun), benefit (maslahah), universalism (naturalism), and does not contain gharar, maysir, usury, injustice and unlawful objects. In addition, the Sharia Banking Law also mandates Islamic banks to carry out social functions by carrying out functions such as baitul mal institutions, that is, receiving funds derived from zakat, infak, alms, grants, or other social funds and distributing them to waqf managers (nazhir) in accordance with the will of the waqf giver (wakif).

Objectives and Functions of Islamic Banking
Islamic Banking in conducting its business activities is based on Sharia Principles, economic democracy, and the principle of prudence. Islamic Banking aims to support the implementation of national development in order to improve justice, togetherness, and equitable distribution of people's welfare. While the functions of Islamic banking are: 1. Islamic banks and UUS are required to carry out the function of collecting and distributing public funds. 2. Islamic banks and UUS can carry out social functions in the form of baitul mal institutions, namely receiving funds from zakat, infaq, alms, grants, or other social funds and channeling them to zakat management organizations. 3. Islamic banks and UUS can collect social funds originating from cash waqf and distribute them to waqf managers (nazhir) in accordance with the will of the waqf giver (wakif). 4. The implementation of social functions as referred to in paragraphs (2) and (3) is in accordance with the provisions of laws and regulations.

Asset Quality
Asset quality according to Taswan (2010:64) is an investment or provision of bank funds that must be carried out based on prudential principles and comply with sharia principles. Bank management is required to assess, monitor and take anticipatory steps so that asset quality is always in a current state, quality assessment is carried out on earning assets. The asset used in assessing the asset quality factor is the Non Performing Financing (NPF) ratio. The higher the NPF, the smaller the ROA because of the company's earnings. Asset Quality (FDR) can be calculated using the following formula: Source: (Dewi, 2010) Liquidity Muhammad (2016: 430) explains that the liquidity ratio is a measure of a bank's ability to meet its short-term obligations. The level of liquidity of a bank reflects how far the bank's ability to manage its funds properly.
Meanwhile, according to Arifin (2012) bank liquidity is the bank's ability to meet its obligations, especially short-term obligations. From an asset perspective, liquidity is the ability to convert all assets into cash. From a liability point of view, liquidity is the ability of a bank to meet its funding needs by increasing its liability portfolio. Liquidity (FDR) can be calculated by the following formula: Source: (Dewi, 2010)

Capital
Capital is funds originating from bank owners or shareholders plus share premium and the results of its operations are derived from the bank's business activities. In this study, the Capital Adequacy Ratio (CAR) is a proxy for capital. Capital Adequacy Ratio (CAR) is a capital adequacy ratio whose purpose is to ensure that banks can cover losses that may arise as a result of their activities.
According to Arifin (2012:159) bank capital has three functions, namely: (1) As a buffer to cover operational losses and other losses.
(2) As the basis for determining the maximum limit for granting credit (financing).
(3) Capital is also the basis of calculation for market participants to evaluate the bank's relative ability to generate profits.
Capital Adequacy Ratio (CAR) is used to assess or find out how big the minimum capital requirement of a bank in running its business. The greater the CAR, the greater the profit on the bank. Capital (CAR) can be calculated by the following formula: Source: (Dewi, 2010)

Profitability
Profitability is a ratio that describes the bank's ability to generate a profit. In this study, ROA is used as a measure of bank profitability. Return on Assets (ROA) is a ratio that describes a bank's ability to manage funds invested in all assets that generate profits (Muhammad, 2016). The greater the ROA of a bank, the greater the level of profit achieved by the bank so that it will increase the bank's profitability and the better the position of the bank in terms of asset use.
The profitability ratio according to Kasmir (2008) has goals and benefits not only for business owners or management, but also parties outside the company, especially parties who have a relationship or interest with the company. Profitability (ROA) can be calculated by the following formula:

Previous Research
According to Ningsih et al. (2017) regarding the Effect of Capital, Asset Quality, Profitability and Liquidity on Profitability of Islamic Rural Banks (BPRS) in Indonesia shows that asset quality has a negative effect on profitability.
According to Widiyanti et al. (2015) regarding the Effect of Capital, Asset Quality, Liquidity, and Operational Efficiency on Profitability at PT Bank Syariah Mandiri and PT Bank Bri Syariah shows that liquidity has a positive and significant effect on profitability.
According to Rahmani (2017) regarding the Analysis of the Effect of Capital Adequacy Ratio (CAR) and Financing to Deposit Ratio (FDR) on Return On Assets (ROA) and Return On Equity (ROE) in Islamic Commercial Bank Companies in Indonesia, it shows that capital has a significant effect on profitability.

Hypothesis
From the existing issue, the hypothesis below is a temporary answer and there must be evidence of its truth, then the formulation of the hypothesis in this study is formulated by looking at the relationship between existing variables, including: H1 : Asset Quality (NPF) has a significant effect on profitability (ROA). H2 : Liquidity (FDR) has no significant effect on profitability (ROA). H3 : capital (CAR) has no significant effect on profitability (ROA).

Research Method
This research is a type of quantitative research using annual data from bank financial statements. Based on its characteristics, this research is included in associative research in the form of a causal relationship. The data used in this research is using secondary data. The secondary data referred to in this study is the annual report of (Islamic Commercial Bank) BUS in Indonesia for the 2015-2019 period which has been published on the official website of each BUS. The population in this study were all BUS in Indonesia covering the 2015-2019 period. Purposive sampling method was used to select the sample in this study.
This research will be tested using multiple linear regression model to find out how the independent variables affect the dependent variable. Multiple linear regression analysis is a statistical test used to determine the effect of two or more independent variables on the dependent variable. Before testing the regression model, the classical assumption test must first be carried out in order to get good regression results. This study will examine the effect of Islamic banking asset quality using the ratio of Non Performing Financing (NPF), Financing to Deposit Ratio (FDR), and Capital Adequacy Ratio (CAR) on profitability using the ratio of Return On Assets (ROA).

Results Descriptive Statistics Test Results
Descriptive statistical test is used to find out the descriptive on a data to see a research sample seen from the minimum value (lowest), highest value (maximum), average value (mean), and standard deviation of each research variable. The results of the descriptive statistical research of this study are as follows: Based on table 2, it is known that there are four variables, namely, (Profitability, Asset Quality, Liquidity, and Capital) with the same total period of 30. With the minimum value as the lowest value of the variable, the maximum value as the highest value of the variable, and the mean as the middle value of the variable. There is also a standard deviation of values in the data for each variable.
The following can be concluded that: The profitability variable (ROA) has a minimum (lowest) value of 0.05% which comes from the profitability variable (ROA) of Bank Muamalat in 2019, this shows that Bank Muamalat in 2019 has the lowest ability to generate profitability (ROA). compared to other Sharia Commercial Banks. While the profitability variable (ROA) has a maximum (highest) value of 2.56% which comes from the profitability variable (ROA) of Bank NTB Syariah in 2019, this shows that Bank NTB Syariah has the highest ability to generate profitability (ROA). compared to other Sharia Commercial Banks. By looking at the average (mean) profitability (ROA) of 1, 1057, it can be concluded that the level of profitability (ROA) has a value that is quite above the standard set by Bank Indonesia, namely 0.05% (5%) that profitability has a fairly good condition in terms of profitability (ROA). Moreover, it has a standard deviation value of 0.77055.
The asset quality variable (NPF) has a minimum (lowest) value of 0.04% which comes from the asset quality variable (NPF) BCA Syariah in 2017, this shows that BCA Syariah in 2017 has the lowest ability to improve asset quality. (NPF). While the maximum value of asset quality (NPF) is 4.97% which comes from the asset quality (NPF) of BRI Syariah Bank in 2018. By looking at the value of the average (mean) asset quality (NPF) which is 1.9680, that statistically, the asset quality level (NPF) of Islamic Commercial Banks is within a safe limit or does not exceed 5% which has been determined by Bank Indonesia.
So it can be concluded that asset quality (NPF) has the ability to manage good management in overcoming the risk of non-performing loans. While the standard deviation value is 1.55538%, in this case the data from the asset quality variable (NPF) is said to be good because the value of the standard deviation is smaller than the average value (mean).
The liquidity variable (FDR) has a minimum (lowest) value of 71.87% which comes from the liquidity (FDR) of BRI Syariah Bank in 2017, where BRI Syariah Bank has the lowest liquidity value (FDR) compared to other Islamic Commercial Banks. So this shows that BRI Syariah Bank is lacking in the ability to channel credit. While the liquidity variable (FDR) has a maximum (highest) value of 100.87% which comes from the liquidity (FDR) of Bank NTB Syariah in 2015, which indicates that the level of lending at Bank NTB Syariah is better than other Islamic Commercial Banks. With an average value (mean) of 83.5570%, it can be concluded that statistically, from the liquidity level (FDR) of Islamic Commercial Banks in Indonesia, the standard is 80%, so that it can be said that Islamic Commercial Banks have been quite effective in extending credit to customers. And judging from the standard deviation of 8.47416% which means the value of the standard deviation is said to be good, because the value of the standard deviation is smaller than the average value (mean).
The capital variable (CAR) has a minimum (lowest) value of 12.00% which comes from the capital (CAR) of Bank Muamalat in 2015, this shows that Bank Muamalat in 2015 has the lowest ability in terms of capital compared to other Islamic Commercial Banks. While the capital variable (CAR) has a maximum (highest) value of 38.30% originating from BCA Syariah in 2019, which shows that BCA Syariah in 2019 has the highest capability in terms of capital compared to other Islamic Commercial Banks. With an average value (mean) of capital (CAR) of 22.0040% which statistically from the level of capital (CAR) at Islamic Commercial Banks has a value that is far from the standard and has been determined by Bank Indonesia, which is 8%, it can be concluded that Islamic Commercial Banks have good conditions in the application of capital because they have a standard deviation value of 8.68038% or the standard deviation value is smaller than the average value (mean).

Data Normality Test Results
This test is conducted to determine whether or not a data distribution is normal. If this assumption is violated, the statistical test becomes invalid for a small sample size (Furzah, 2019). The normality test in this study used the Kolmogorov-Smirnov value. The data can be said to be normal if the significant value is greater than 0,05. The following is the data normality test table:

Multicollinearity Test Results
The multicollinearity test is part of the classical assumption test in multiple linear analysis. The purpose of this test is to determine whether there is a strong relationship between the independent variable and the dependent variable. In the regression model, it is found that there is a correlation between the independent variables. A good regression model should not have a correlation in the independent variables. Based on the tolerance value, multicollinearity will not occur if the tolerance value is > 0.10. And vice versa if there is multicollinearity then the tolerance value is < 0.10. Likewise, the VIF value does not occur multicollinearity if the VIF value is < 10.00. On the other hand, if the VIF value is > 10.00 then multicollinearity occurs. One way to find out whether there is a strong relationship between variables is using the Tolerance and VIF (Variance Inflation Factor) methods.
The following is a multicollinearity test table:

International Journal of Economics, Business and Accounting Research (IJEBAR) Peer Reviewed -International Journal Vol-6, Issue-2, 2022 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771
https://jurnal.stie-aas.ac.id/index.php/IJEBAR  Asset Quality has a tolerance value of 0.570 or greater than 0.10 and a VIF value of 1.753 or less than 10.00, which means that there is no multicollinearity.  Liquidity has a tolerance value of 0.714 or greater than 0.10 and a VIF value of 1.401 or less than 10.00, which means that there is no multicollinearity.  Capital has a tolerance value of 0.650 or greater than 0.10 and a VIF value of 1.538 or less than 10.00, which means that there is no multicollinearity.
Based on the data above, it can be concluded that there is no correlation between the independent variables or there is no multicollinearity because the independent variable has a tolerance value greater than 0.10 and a VIF value less than 10.00.

Heteroscedasticity Test Results
The heteroscedasticity test is the result of the classical assumption test in the regression model. The aim is to test whether in the regression model there is an inequality of variance from the residuals from one observation to another. One of the requirements that must be met in a good regression model is the absence of heteroscedasticity symptoms. The way to prevent heteroscedasticity is to have a Significant value > 0.05. If the significant value < 0.05 then heteroscedasticity occurs. Symptoms or problems of heteroscedasticity result in an inaccuracy in the results of the regression analysis carried out.

Source: SPSS25 Processed Data
The results of the heteroscedasticity test show that the significant value of asset quality is 0.010 <0.05, which means that there is heteroscedasticity. In contrast to asset quality, the significant value of liquidity is 0.200 > 0.05; capital 0.261 > 0.05 . This means that there is no heteroscedasticity.

Autocorrelation Test Results
This autocorrelation test aims to test whether in the linear regression model there is a correlation between the confounding error in period t and the error in the previous period (t-1). To check whether there is an autocorrelation that will arise as a result of sequential observations and are related to each other, the method is to use the Durbin-Watson test (DW Test).
Here are the results of the autocorrelation test: Based on table 6, shows that the value of Durbin-Watson is 0.686. What will be compared with the significant table value is 0.05 (5%). The analysis of the autocorrelation test in this study is the dl value of 1.214, the du value of 1.650. With the number of independent variables k-3 and the number of data observations as much as 30. The results of the autocorrelation test are 4-d > du , or it can be concluded that there is no negative autocorrelation.

Coefficient of Determination Test Results (R 2 )
The coefficient of determination test (R 2 ) is a quantity or proportion that shows how many variations of a variable are able to explain the variation of a variable in the form of a percentage (%). The value of R 2 can be said to be good if the value is above 0.5. Because the value of R 2 is between 0 and 1.
The following is a table of the results of the coefficient of determination (R 2 ) test: The results of the coefficient of determination (R 2 ) in table 7 show that the R Square value is 0.551 or 55.1%. So it can be concluded that asset quality, liquidity, and capital have an effect of 55.1% on profitability. While the remaining 44.9% can be influenced by other variables outside of the discussion model of this study.

F-Test Results
The F test is the same as the simultaneous hypothesis test or it can also be called the ANOVA test. The assumption is a valid and reliable indicator, the variable has one independent variable. If the value of sig. < 0.05, or F count > F table, then there is an effect of independent variables (asset quality, liquidity, and capital) simultaneously on the dependent variable (profitability), on the other hand if F count < F table then there is no simultaneous effect of independent variables on dependent variable. The following is a table of results from the F test: Source: data processed by SPSS25 Based on table 8. the F-count value obtained a result of 10.642 with a significant value of 0.000 which is smaller than 0.05. There are also F-tables to be compared with F-count. The number of independent variables k = 3, with the number of samples = 30, with a significant level of 0.05 (5%), it can be calculated by the formula to find the F table; It can be concluded that the significant value is 0.000 <0.05 or F-count 10.642 > 2.96 Ftable, so there is a significant effect of the dependent variable (profitability) on the independent variables (asset quality, liquidity, and capital).

t-Test Results Statistic (t-Test)
The t-test is used to see how influential the independent variables (asset quality, liquidity, and capital) are on the dependent variable (profitability). Independent variables can be said to have an effect on the dependent variable if the value (sig) < 0.05 or t count > t table. And there is no effect of the independent variable on the dependent variable if the value (sig) > 0.05 or t count < t table. The following is a table of results from the t statistical test: Based on the analysis in table 9, the regression can be formulated as follows: a) H1 : Asset Quality Ratio (NPF) to Profitability (ROA). Asset quality has a t-count value of -3.391, while the t-table is 2.056 or -2.056. With the value of t count -3.391 > -2.056. And the significant value is 0.002 < α (0,05). Asset quality has a negative regression coefficient direction and has a significant effect on profitability. So it can be said that asset quality has a significant effect on profitability (ROA), then the first hypothesis (H1) is accepted. H1: Asset Quality has a significant effect on Profitability. b) H2 : Liquidity Ratio (FDR) to Profitability (ROA).
Liquidity has a t count value of -0.376, while the t table is 2.056 or -2.056. With t value -0.376 < -2.056. And the significant value is 0.710 > α (0,05) and has a negative regression coefficient direction and has no significant effect on profitability. So that it can be said that liquidity has no significant effect on profitability (ROA), then the second hypothesis (H2) is rejected. H2: Liquidity has no significant effect on profitability. c) H3 : Capital Ratio (CAR) to Profitability (ROA).
Capital has a t-count value of 1.612, while the t-table is 2.056 or -2.056. With a t-count value of 1.612 < 2.056. And the significant value is 0.119 > α (0,05) and has a positive regression coefficient direction but has no significant effect. So it can be said that capital has no significant effect on Profitability (ROA), because it has no significant effect, the third hypothesis (H3) is rejected. H3 : Capital has no significant effect on profitability. Based on the table above, the following multiple linear regression equation is obtained: Y = α value, which is 1.612 + (-0.292) Asset Quality (NPF) -(-0.005) Liquidity (FDR) + 0.023 Capital (CAR). The equation of the regression above is described as follows: a. The constant value is 1.612, which means that if the independent variable is considered = 0 , then the value of the dependent variable (Profitability) is 1.612. b. The value of the NPF coefficient is -0.292, indicating that for every 1% addition to the NPF value, profitability will increase by -0.292 with the assumption that the other independent variables are constant. c. The value of the FDR coefficient is -0.005 indicating that for every 1% addition to the FDR value, profitability will increase by -0.005 with the assumption that the other independent variables are constant. d. The value of the CAR coefficient is 0.023, indicating that for every 1% addition to the CAR value, profitability will increase by -0.292 with the assumption that the other independent variables are constant.

Discussion Effect of Asset Quality (NPF) on Profitability (ROA).
The results of this study indicate that asset quality has a significant negative effect on profitability (ROA). Which means that the higher the ratio value of the NPF, the ROA value will decrease. It can be said that if the NPF condition in a bank gets higher, there will also be a lot of costs so that it can potentially cause losses to the bank. In addition to potential losses, the higher the NPF value, the worse the financing that occurs in Islamic banks, consequently making the amount of financing larger and problematic for the Islamic bank and may cause a loss to the bank.
The results of this study are also consistent with research conducted by Chotijah & Fuadati Suggestion a) For Companies Banks need to reconsider what factors can significantly affect the level of the amount of financing carried out so that they can obtain the desired or greater profit or profit while still applying prudence in order to attract customers and their funds will be invested in the bank. Furthermore, it is hoped that banks will be more selective in increasing profit sharing in order to minimize cost growths to have a positive effect on Islamic banks. b) For Researchers The data used for this study is five years and uses a period of per year. For further researchers, if they are interested in conducting research using the profitability ratio (ROA), it is better to add more other variables to be used as research material, and add another research period to the quarter instead of a year, so that the results that will be obtained are even better.