Optimalization Profitability Through Working Capital Management and Capital Structure : Evidence from Indonesian Banking Industry

This paper analyze the impact of working capital management particularly working capital and capital structure on banking profitability. We apply panel estimation on monthly data over 105 banks during the period of 2003–2013, covering State-owned Bank, Foreign Exchange Public Bank, Non Foreign Exchange Public Bank, Regional Development Bank, Foreign Bank and Mix Bank. The result shows a significant positive effect of capital structure on banking profitability. The working capital also affect the banking profitability positively. These findings emphasize the importance of the third party fund for the bank, and the need to better manage their working capital