Abstract:
A financial institution that uses public savings or deposits to lend money to people or
organizations in need is called "banking". The bank's success depends on public trust in its ability
to mediate and move cash. This study examines how liquidity ratios and operational efficiency
affect profitability, taking credit risk into consideration. This study examines Indonesian banking
companies that went public between 2018 and 2021. Purposive sampling was used to choose the
sample. Data analysis uses regression analysis. PLS and hypothesis testing are used to use
mediating or intervention factors. This study suggests that the liquidity ratio directly affects a
company's credit risk. Note that the liquidity ratio does not directly affect corporate profitability.
Creditor default risk and profitability are directly affected by operational efficiency. Credit risk
also significantly affects earnings. It is crucial to know that credit risk negates the economic effects
of liquidity ratios and operational efficiency.
