Publication Date: 2022/08/23
Abstract: The purpose of this paper is to analyze the significance relationship between variables used as indicators of banks’ financial performance, namely the Capital Adequacy Ratio (CAR), Return on Assets (ROA), Operational Efficiency Ratio (OER), Net Interest Margin (NIM), and Non-Performing Loan ratio (NPL) towards the banks’ value, measured by the Price to Book Value (PBV), from the year 2017 until 2021, specifically in Indonesia. Design/methodology/approach – This paper is using a quantitative analysis approach with correlation research strategy and the type of data used in this research is timeseries and cross-section data that are secondary data, namely the financial indicators of the banking companies sourced from financial databases. The population of this research is banking companies that are listed under the Indonesia Stock Exchange (IDX). Purposive sampling technique is used in this research, and 13 companies are collected for data analysis. This research applied panel data regression analysis, using Random Effect model. Findings – The results show that there is a significant and positive relationship between the ROA and the NIM towards the PBV of the banking companies. Meanwhile, there is no significant influence of the Capital Adequacy Ratio (CAR), Operational Efficiency Ratio (OER), and Non-Performing Loan ratio (NPL) toward the PBV of the companies. Originality – The managers of the banking companies can seek to focus on optimizing the profitability of the companies to aim for higher company value, due to the positive and significant relationship results between the ROA and NIM to the PBV.
Keywords: Company Value, Panel Data Regression, Price to Book Value, Profitability, Random Effect Model.
DOI: https://doi.org/10.5281/zenodo.7016292
PDF: https://ijirst.demo4.arinfotech.co/assets/upload/files/IJISRT22JUL1323_(1)_(1).pdf
REFERENCES