Effect of Credit Risk and Market Risk on Financial Performance With Liquidity as a Mediation on LPD in Badung Regency, Indonesia

The banking sector has a very vital role in the parent national goals that are intended to improve and equalize people's standard of living and support the running of economic wheels, payment transaction operators, and monetary policy transmission tools. The purpose of this study is to obtain empirical evidence on the influence of credit risk as measured by NPL, market risk measured by NIM against financial performance measured by ROA and ROE through liquidity measured by cash ratio. Quantitative methods were used in this study. The method of determining samples using saturated sampling or census so that 112 LPD can be sampled with 336 observations. The results showed that only hypothesis 5 and hypothesis 6 were accepted. Ten other hypotheses were rejected. Simultaneous leverage indicates that 62% of financial performance (ROA) is affected by credit risk, market risk and liquidity. The remaining 38% is affected by other variables not listed on the model. While 25% of financial performance (ROE) is affected by credit risk, market risk and liquidity. The remaining 75% is affected by other variables not listed on the model. Credit risk (NPL), market risk (NIM) and liquidity (Cash Ratio) have a greater direct or indirect influence on financial performance variables as measured by ROA than ROE. In other words, ROA variables are more suitable to be used to test the influence on banking sector companies, especially in this case LPD.