The Impact of Risk-Based Bank Rating on the Stock Price of Banking Companies Registered in Indonesia Stock Exchange

Abstract

This study aims to determine which of the loan to deposit ratio, return on assets and capital adequacy ratio that has a dominant effect on stock prices in the banking industry in Indonesia. This study was conducted in the period 2011 to 2017. The population was all banks listed on the Indonesia Effect Exchange and carried out a self-assessment of GCG in accordance with the instructions of the central bank, Bank Indonesia. The amount of time series data observed was 112 units of analysis. The uniqueness of this research is conducting research on uncertain banking conditions, especially predicting the value of the company and the stock price. The results of the study are certainly beneficial for investors. Data analysis techniques used multiple linear regression. The results of the study prove that the Loan to Deposit Ratio (LDR) does not have a significant effect on the stock prices, Good Corporate Governance (GCG) has no significant effect on stock prices, Return on Assets (ROA) has a dominant influence significantly positive on stock prices and Capital Adequacy Ratio (CAR) have a significant positive effect on the stock prices.

Keywords:stock price, loan to deposit ratio, good corporate governance, return on assets, capital adequacy ratio

DOI: 10.7176/RJFA/10-24-01

Publication date: December 31^st 2019