THE EFFECT OF EFFICIENCY RATIO, BAD CREDIT AND PROFITABILITY TO CAPITAL ADEQUACY RATIO AT SHARIA COMMERCIAL BANKS IN INDONESIA YEAR 2014-2018

This study aims to determine the effect of efficiency ratios, non-perfoming loans, and profitability on the capital adequacy ratio in Islamic Commercial Banks in Indonesia 2014-2018. This research is a quantitative study with secondary data from financial reports. Purposive sampling is a sampling technique use in this study so that there are 14 samples of Islamic commercial banks during the 2014-2018 period. The data analysis used is multiple linear regression analysis with the SPSS application. The results obtained by two dependent variables, the efficiency ratio and non-performing loans have an influence on the capital adequacy ratio. Meanwhile, profitability partially has no effect on the capital adequacy ratio.

Based on signaling theory that explained that information issued by banks or companies is a signal for external parties banks (Novalia & Nindito, 2016). The signal can be in the form of information on capital adequacy which is an indicator of the health of the bank. According to Maya & Anggun (2016) said that the capital aspect for national banks is very important because a very large capital strength is needed in global competition. According to Bank Indonesia, the bank's capital adequacy level can be maintained by paying attention to the capital adequacy ratio (CAR), which is the most important indicator in maintaining the bank's capital level. According to Bukian & Sudiartha, (2016) one of the factors affecting CAR is the BOPO efficiency ratio. BOPO ratio is a comparison between operating expenses and operating income in measuring the level of efficiency and ability of banks in conducting their operations (Rivai, Basir, Sudarto, & Veithzal, 2013). While according to (Azizah & Taswan, 2019) factors that affect CAR are NPL and profitability. NPL (Non Performing Loan) or bad credit is one of the measurements of the bank's business risk ratio that shows the amount of non-performing credit risk in a bank (Darmawi, 2011). Profitability is a ratio that measures the effectiveness of management as a whole indicated by the size of the ability gained in relation to sales and investments (Fahmi, 2012). The better the profitability ratio, the better it will describe the company's high profitability. Yuliani et al.'s previous research (2015) showed that variable yields on bad loans and profitability had no effect on capital adequacy ratios while Natasia (2015) showed NPL or bad credit results and profitability had an effect on capital adequacy ratios. Research related to efficiency ratio by ( Oktaviana & Syaichu, 2016 ) shows that BOPO efficiency ratio has no effect on CAR while Bukian & Sudiartha research, (2016) BOPO has an influence on Capital Adequacy Ratio (CAR). Based on the description of the importance of capital adequacy ratio and the difference in results in previous research, this study examines aspects that can affect the capital adequacy ratio, namely efficiency ratio, bad credit and profitability. The purpose of this study is to determine the effect of efficiency ratio, bad credit and profitability to capital adequacy ratio.

LITERATURE REVIEW Signaling Theory
Signal theory explains that the information released by the company is a signal for decision making (Novalia & Nindito, 2016). Signaling theory emphasizes the importance of information released by the company to investment decisions of parties outside the company. The attachment that Ekspektra : Jurnal Bisnis dan Manajemen, Volume 5, Nomor 2, Hal. 112 -122 ISSN 2549-3604 (Online), ISSN 2549-6972 (Print) DOI: http://dx.doi.org/10. 25139/ekt.v5i2.4201 occurs in this research with Signaling theory is sharia banks issue signals or all information related to bank performance, such as efficiency ratio, bad credit, profitability and capital adequacy.

Economies of Scale
According to Christensen & Greene (1976) the theory of the Economy of Scale of a bank can be said to achieve economies of scale when the bank is able to produce more output with a relatively smaller proportion of cost increases. In contrast, a bank does not reach economies of scale, or socalled diseconomies of scale, when the proportion of rising costs is relatively greater to produce more output. That is, banks that are able to achieve economies of scale more efficiently.tio.

Capital Adequacy Ratio
Capital adequacy is a banking regulation that establishes a framework for banks and storage institutions on how to handle their capital (Frida, 2020). The level of capital adequacy of banks is stated by a ratio called capital adequancy ratio (Andrianto & Firmansyah, 2019). CAR (Capital Adequacy Ratio) describes the bank's ability to cover the risk of losses from its activities and the bank's ability to fund its operations (Fahmi, 2012). Meanwhile, according to Cashmere (2015) CAR is a comparison between the ratio of capital to Risk-Weighted Assets (ATMR) and in accordance with government regulations.

Efficiency Ratio
Bank efficiency is the ability of banks to use production factors effectively that can be measured by the ratio of Operating Income Operating Expenses (BOPO). BOPO is a ratio of comparison of operating expenses to operating income used to measure the bank's ability in the effectiveness of its operational activities (Fatimah, 2014). Meanwhile, Rivai et al., (2013), according to him, BOPO ratio is a comparison between operating expenses and operating income in measuring the level of efficiency and ability of banks in carrying out their operations.

Bad Credit
Cashmere (2015) said that non-performing loans (NPLs) are non-performing loans or bad loans are loans in which there are obstacles caused by 2 elements, namely from the bank in analyzing and from the customer who intentionally or unintentionally in his obligations do not make payments. NPL is a ratio used to measure banks' ability to cover the risk of credit repayment failure by debtors. NPL reflects credit risk, the smaller the NPL the less credit risk borne by the bank (Cashmere, 2015). Meanwhile, according to Yuliani et al., (2015) bad loans are loans that have difficulty paying off due to intentional factors and or factors beyond the company's ability.

Profitability
According to Cashmere (2016) the profitability ratio is a ratio to assess the company's ability to seek profit, this ratio also provides a measure of the effectiveness of management or the company in using its assets. The better the profitability ratio, the better it will describe the company's high profitability. At banks, profitability is the ability of banks to make a profit by utilizing assets owned by the bank (Mainata & Ardiani, 2017). Profitability can be proxyed with Return On Assets (ROA). ROA is calculated by comparison of profit after tax with total assets owned by the company.

HYPOTHESIS DEVELOPMENT Effect of Efficiency Ratio to Capital Adequacy Ratio
According to Christensen & Greene (1976) a bank can be said to achieve economies of scale when it is able to produce more output with a relatively smaller proportion of fee increases so that it can be interpreted that the bank's performance has been efficient. Bank efficiency is the bank's ability to effectively use production factors that can be measured by the ratio of Operating Expenses of Operating Income or BOPO (Frida, 2020). BOPO shows a comparison between operating costs and bank operating income. A high BOPO ratio can reduce the capital held by the bank because the operational costs borne by the bank are higher than the income so that the bank has to cover the costs -the excess operational costs of the bank are borne. Therefore, a large BOPO will lower the Capital Adequacy Ratio (CAR), and a low BOPO will increase the Capital Adequacy Ratio (CAR). Research conducted by Yuliani et al., (2015) and Bukian & Sudiartha, (2016) showed results that BOPO negatively affects CAR. Thus, the hypotheses developed in this study are: H1: Efficiency ratio negatively affects capital adequacy ratio

Effect of Bad Credit on Capital Adequacy Ratio
Based on signal theory that explains the importance of information issued by banks such as non-performing loans (NPL). Yuliani et al., (2015) bad loans are loans that have difficulty paying off. The increase in Non Performing Loans (NPLs) indicates an increase in non-performing loans to the total loans held by the Bank. If non-performing loans increase, the interest income obtained by the bank from the credit will be reduced, resulting in the bank's profit also decreasing. With a decreased profit can have an impact on the capital adequacy ratio because profit is one of the constituent components of capital (Yuliani et al., 2015). The development of this research hypothesis is supported by the research of Oktaviana & Syaichu (2016) and Andhika & Suprayogi (2017), Natasia (2015) with the results of their study NPL has a negative influence on the capital adequacy ratio (CAR). H2: Bad credit negatively affects capital adequacy ratio

The Effect of Profitability on Capital Adequacy Ratio
Based on signal theory, profitability is one of the important information or signals for external parties of the bank. Profitability is a ratio to assess the company's ability to make a profit, this ratio also provides a measure of the effectiveness of management or the company in using its assets (Cashmere, 2016). If the ROA increases it can be interpreted that the company's performance in generating profit with its assets is getting better so that CAR which is an indicator of the bank's health is also increasing. This is also supported by the research results of Jaya (2017) and Azizah & Taswan (2019) namely profitability as measured by ROA positively affects the capital adequacy ratio (CAR). H3: Profitability has a positive effect on capital adequacy ratio

RESEARCH METHODS Types of Research and Data Sources
The research approach in this study is quantitative approach using independent variables and dependent variables. Quantitative method can be interpreted as research method based on philosophy of positivism, used to research on population or in certain samples, data collection using research intrusion, data analysis is quantitative / statistical, with the aim to test the hypothesis that has been applied (Sugiyono, 2015). The type of data used in this study is secondary data. Data obtained from financial statements sourced from the web of each sharia commercial bank.

Population and Sample
One of the steps taken in the research is to determine the object to be studied and the size of the existing population. The population in this study is all sharia commercial banks in Indonesia year 2014-2018 which can be seen in table 3. Once the population is determined then the next is to determine the sample. Sampling in this study used purposive sampling technique. The use of purposive sampling because not all samples have criteria that match the one the author has specified. Therefore, the author chose purposive sampling techniques by establishing certain considerations or criteria that must be met and can be used in this study. With the following criteria: a. Sharia Commercial Banks that issued complete financial report data for the period 2014-2018. b. Sharia Commercial Banks that do not merge or acquisition with other banks.

Research Variables and Operational Definitions Efficiency Ratio (X1)
In this study the efficiency ratio was measured using BOPO. Rivai et al., (2013) according to bopo ratio is a comparison between operating expenses and operating income in measuring the level of efficiency and ability of banks in carrying out their operations. Bopo efficiency ratio is calculated by using the formula:

Bad Credit (X2)
Cashmere (2016) said non-performing loans or bad loans are loans in which there are obstacles caused by 2 elements, namely from the bank in analyzing or from the customer who intentionally or unintentionally in his obligations do not make payments. Bad credit in this study was measured using non-performing loan (NPL) ratio. NPL ratios can be calculated by using the formula:

Profitability (X3)
According to Cashmere (2016) the profitability ratio is a ratio to assess the company's ability to make a profit, it also provides a measure of the effectiveness of management or the company in using its assets that can be calculated using the formula:

Capital Adequacy
The capital adequacy ratio can be calculated using CAR (Capital Adequacy Ratio). According to Cashmere (2015) said that CAR is a comparison between the ratio of capital to Risk-Weighted Assets (ATMR) and in accordance with government regulations that can be calculated using the formula:

Data Analysis Techniques
Data analysis used is descriptive statistical analysis and multiple linear regression analysis with SPSS. Multiple linear regressions are used to study the relationship between two or more variables, primarily to trace relationship patterns whose models are not yet perfectly known (Ghozali, 2016). In multiple linear regressions there are classical assumption tests, coefficients of determination, simultaneous tests and partial tests.

ANALYST RESULTS AND DISCUSSIONS Analyst Results Descriptive Statistical Analysis
The results of this study's descriptive statistical analsisis can be seen in Source: SPSS output, author-processed data

Classic Assumption Test Test Normality
The normality test aims to test whether in the regression model the bully or residual variable has a normal distribution as it is known that the t and F tests assume that residual values follow the normal distribution (Ghozali, 2016). To be able to test the normality of the regression model, the study used the Normal P-P Plot of Regression Standardized Residual method. In figure 1. normality test results in the graphic image show that the spread of data (points) on the diagonal axis of the graph does not spread far from the diagonal line or follow the direction of the diagonal line, then the regression model meets the assumption of normality.

Heterosceticity Test
Heterosceticity test aims to detect the occurrence of relevant values that differ from each variant of free variables namely Efficiency Ratio (BOPO), Bad Credit (NPL), and Profitability (ROA) in the regression model. In figure 2 of the heterosesesedastiity test results, it is seen that scatterplot does not form a particular pattern so there is no heteroscedastisity. Here are scatterplot results obtained from spss output.

Multicollinierity Test
Multicolloremity tests are used to test whether or not there is co-ornuation between variables (Ghozali, 2016). Variables are free from multicollinierity if tolerance value > 0.1 and Variance Invlation Factor (VIF) value < 10, then there is no multicollitas. Based on table 5 below, the tolerance value of all variables is more than 0.1 and the variance inflation factor (VIF) value is less than 10. So it can be concluded that this research data does not experience multicolliation between free variables.

Multiple Linear Regression Analysis
Regression analysis is used to determine the effect of Efficiency Ratio (BOPO), Bad Credit (NPL), and Profitability (ROA) on bound variables namely Mpdal Adequacy Ratio (CAR). Table 10 contains the values of coefficient of determination, partial test (t test), and simultaneous test (F test). The RSquare value of the determination test indicates the RSquare value is 0.337 or 33.7%. This value shows capital adequacy (Y) is influenced by variable Efficiency Ratio (BOPO), Bad Credit (NPL2), and Profitability (ROA) the remaining 66.3% is influenced by other variables not studied in this study. Furthermore, the partial test, two independent variables namely Efficiency Ratio (BOPO) and Bad Credit (NPL) has an influence on the Capital Adequacy Ratio. While in the variable Profitability (ROA) has no effect on the Capital Adequacy Ratio. The last test is a simultaneous test that has the result that the three independent variables namely Efficiency Ratio (BOPO), Bad Credit (NPL), and Profitability (ROA) jointly affect the Capital Adequacy Ratio. Source: SPSS output, author-processed data

Effect of Efficiency Ratio to Capital Adequacy Ratio
Based on the results of statistical calculations with t-test shows that BOPO partially has a significant positive influence on CAR this means that if BOPO increases then CAR increases as well as vice versa if the VALUE of BOPO decreases car value also decreases. due to sharia banks experiencing a decrease in BOPO which means that the increase in operating costs is smaller than the decrease in operating income, which causes a smaller increase in operating costs than the increase in operating income. Thus the bank's profit increased, bank capital increased and CAR also increased. When the proportion of the cost increases is relatively greater to produce more output. This means that the bank is able to achieve economies of scale more efficiently. The results of this study are consistent with the results of research (Fatimah, 2014) namely BOPO has a positive effect on CAR. High BOPO then CAR will increase, and vice versa when BOPO down CAR will decrease. This is because the high BOPO indicates the inefficientness of banks in generating their profits using operational costs, so it can be seen that capital is not used in the bank's efforts to streamline operating income through operating costs.

Effect of Bad Credit on Capital Adequacy Ratio
Bad credit (NPL) in this research partially negatively affected CAR. Based on signal theory that explains the importance of information issued by banks, one of which is non-performing loans (NPL). Bad loans (NPLs) in this research have a negative effect, it can be interpreted that if the NPF increases, it can be said that there is an increase in non-performing loans to the total credit held by the bank. The non-performing loans will hinder the receipt of interest income so that the bank's income decreases and causes the cost of credit reserves for the NPL to increase (Natasia, 2015). Declining revenues make the bank use its capital for the bank's operational activities. The higher the NPL, the higher the capital used for operations and lower the number of CAR (Oktaviana & Syaichu, 2016). The results of this research are consistent with the research results of Oktaviana & Syaichu (2016), Natasia (2015), Andhika & Suprayogi (2017) namely bad loans affecting the capital adequacy ratio.

The Effect of Profitability on Capital Adequacy Ratio
Profitability (ROA) in this research partially had no effect on the capital adequacy ratio (CAR). Profitability as measured by ROA in this research has no effect because the high value of CAR is not only derived from profit but the main one comes from the owner's deposited capital and Ekspektra : Jurnal Bisnis dan Manajemen, Volume 5, Nomor 2, Hal. 112 -122 ISSN 2549-3604 (Online), ISSN 2549-6972 (Print) DOI: http://dx.doi.org/10.25139/ekt.v5i2.4201 the value of Risk Weighted Assets (ATMR) (Yuliani et al., 2015). Capital is used to maintain the bank's operational continuity and also to cover the losses of problematic productive assets. The smaller the placement of funds on risky assets, the higher the capital adequacy ratio. In one of the research samples, the highest value of CAR at Maybank Syariah in 2018 with negative ROA value, although the negative profitability value (ROA) of CAR value remains high due to the use of capital and third party funds to encourage effective business growth for Sharia banks as reflected by the high CAR. Based on this, CAR is not influenced by profitability but by other factors, one of which is the use of capital and third party funds. The results of this research are supported by research Yuliani et al., (2015) which has a variable result of profitability has no influence on the capital adequacy ratio.

CONCLUSION
Based on the results of research and discussion on the effect of efficiency ratio, bad credit and profitability to capital adequacy ratio, it can be concluded that the efficiency ratio has a positive effect because the increase in operating costs is smaller than the decrease in operating income so that sharia banks still profit and profit affect CAR. Furthermore, bad loans negatively affect the capital adequacy ratio due to bad loans resulting in the cost of credit reserves and interest income receipts being hampered so that banks use their capital for operations, thus affecting the capital adequacy ratio. Profitability in this research has no effect on the capital adequacy ratio because a high CAR not only comes from profit but the main one comes from the owner's deposited capital and the value of Risk Weighted Assets (ATMR).
The advice for further research is first, increase the research period to make the results more accurate and use proxies other than those used in this study to measure research variables. Second, it can replace or add dependent variables with other variables and it is recommended for bank management to pay attention to variables that are proven to affect CAR, namely variable efficiency ratio and bad credit. Finally, the bank should maintain its capital (CAR) to remain at 8% in accordance with BI regulations in addition to maintaining public confidence in the bank's health.