<![CDATA[This study examines the effect of lending on Micro, Small and Medium Enterprises (MSMEs) on the profitability of commercial banks in Indonesia. The profitability is measured as Return-on-Assets (ROA) and Return-on-Equity (ROE). It covers the period of 2011 to 2014 using a panel data regression. It finds that MSME loans have a positive impact on ROE. Other internal factors that significantly influence the profitability of banks are MSME’s NPL (non performing loan), the operational efficiency ratio (OER) and loan-to-deposit ratio (LDR), while external factors that significantly influence the profitability of banks are inflation, Gross Domestic Product (GDP) growth and the Bank Indonesia (BI) rate. ]]>
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