Abstract :
The aim of this study is to analyze the simultaneous relation between
capital and risk in the commercial banks listed in Indonesia Stuck Exchange.
The Factor examined are profitability, non-performing loan. regulatory pressure, size, capital and risk level in the previous period. To estimate simultaneous
relation between these factors, we used 2 SLS (two stage least square) because the
capital and risk model have simultaneous relation. The result of the analysis
indicates that capital and risk do not have significant relation. However, banks
tends to comply with capital requirement as the result of regulatory pressure.
Keyword: simultaneous relation, capital and risk, two stage least square. regulatory pressure.