Abstract

The banking sector is increasingly crucial in driving economic growth through healthy and sustainable credit distribution. This study aims to analyze the effects of Loan to Deposit Ratio (LDR), Capital Adequacy Ratio (CAR), and firm size on credit distribution in banks in Indonesia. The results show that LDR has a positive and significant impact on credit distribution, meaning that the higher the LDR ratio, the more credit can be disbursed by the bank. On the other hand, CAR has a negative and significant impact on credit distribution, indicating that banks with higher CAR tend to be more conservative in granting credit to maintain financial stability. This study also reveals that firm size does not mediate the relationship between LDR and credit distribution, meaning that firm size does not significantly affect the influence of LDR on credit distribution. The practical implication of these findings is that banks need to carefully manage LDR to increase credit distribution while maintaining a healthy CAR to manage risks and financial stability. This study contributes to understanding the dynamics of financial ratios in determining credit policies in the Indonesian banking sector.