Village credit institution: Does business risk effect on profitability?

Abstract

Profitability is a ratio to assess the company's ability to seek profit. Every company is certainly competing to make a profit. The purpose of this study was to determine the significance of credit risk, liquidity risk, and operational risk partially affecting profitability at Village Credit Institutions in Denpasar District. The sample used in the study was 11 Village Credit Institutions with multiple linear regression analysis methods. The results showed that credit risk had a negative and significant effect on the profitability of the Village Credit Institution in South Denpasar District. Liquidity risk has a positive and significant effect on the profitability of the Village Credit Institution in South Denpasar District. Operational risk has a negative and significant effect on the profitability of the Village Credit Institution in South Denpasar District. Credit risk, liquidity risk and operational risk have a significant effect on the profitability of the Village Credit Institution in South Denpasar District.