CAMEL Method: Bank Health Levels for Financial Performance of Banking in Indonesia Stock Exchange Period 2006 to 2015

Abstract

The Banking, one of the corporate sector in Indonesia, has an important role  in  promoting the economy system. The effect of it leds to banking companies to keep their financial performance especially for companies that listed on Bursa Efek Indonesia (Indonesian Stock Exchange) through optimalisation on it’s firm value. At the end, it will affect to the soundness of banking company. In this study, CAMEL Method (Capital, Asset, Management, Earning, and Liquidity) is used to measure the value of  bank.  It consists of Capital Adequacy Ratio (CAR),  Non Performing Loan (NPL), Operating Expenses Operating Income (BOPO), Return on Assets (ROA), and Loan to Deposit Ratio (LDR). While, the ratio Price to Book value (PBV)  is  employed to analyze the financial performance of the company's value. In this study, the methodology used in this study is the analysis of data panel using the Fixed Effect. The results of the CAMEL methods research stated that there is influence of the bank to the Company's performance as measured through the Price to Book Value (PBV). Results of regression estimation of panel data also showed that the Operating Expenses Operating Income (BOPO)  and Return on Assets (ROA) affects positive and significant to Price to Book Value (PBV), while the Loan to Deposit Ratio (LDR) has a significant and negative effect on the Price to Book Value (PBV).

Keywords : Price to Book Value, CAMEL, CAR, NPL, BOPO, ROA, LDR