Dominant Factors of Banking Profitability That Implicate Firm Value

Abstract

This study is intended to examine the dominant factors that influence the profitability and stock returns of the banking sector when high interest rates occur. The object of this research is the banking sector companies on the Indonesia Stock Exchange with a population of 33 companies in the 2011-2016 period. Using certain criteria so that a sample of 10 companies is obtained. This study uses the variables BOPO, CAR, NPL, LDR, SBI, ROA, and Tobin's Q firm value. All the research variables are divided into two research models, namely the first model uses the endogenous variable ROA which functions as an intervening variable and the second model uses the endogenous variable Tobin's Q firm value. In the results of the first research model, the BOPO and NPL variables have a significant effect on ROA, while the CAR, LDR, SBI variables have no significant effect on ROA. All exogenous variables together using the F-test have a significant effect on the endogenous variable, ROA, at the Adjusted R Squared level of 0.421089. In the second research model results that the variables BOPO, CAR, NPL, and LDR have no significant effect on Tobin's Q firm value. By using the F-test, all exogenous variables together have a significant effect on the endogenous variable, Tobin's Q firm value, at the level of Adjusted R Squared 0.194291. Among the exogenous variables in this study, the dominant factor is the NPL variable in the first research model