IS THERE A TRADE-OFF BETWEENCAPITAL ADEQUACY AND PROFITABILITY?
This study aims to find out the impact of Capital Adequacy Ratio(CAR) andThird Parties Fundtowards Lending and Return on Asset (ROA). The populationin this study are all of Public Banks in Indonesia registered in Indonesia Stock Exchangein the period of 2012-2015. The Sample taken by purposive sampling of 15 Public Banks in Indonesia. This study uses data panel in the form of Public Banks financial report registered in Indonesia Stock Exchange. The used analytical method of this study ispath regression analysis. The result of this study shows that Capital Adequacy Ratio (CAR) gives negative impact and significant towards Return on Asset.The finding oh this research is lending becomes mediator between third parties fund (funding) and Return on Asset. Third Parties Fund has high contribution in increasing profitability through Lending.