Bank Risk and Banking Financial Performance in Indonesia

Rai Sukmawati Dana, I. Wayan Widnyana and Putu Kepramareni

This study aims to review and obtain empirical evidence of banking risk (NPL and LDR) and financial performance (ROA) that affect the firm value (PBV) in Banking companies listed on the Indonesia Stock Exchange so do that as the population on this study especially in 2017. The sampling technique used is a saturated sample of 42 banking companies. Methods of data analysis using multiple linear regression and multiple tests. The results of the analysis show an R2 of 72.6% with a significance value of 0,000 less than 0.05. Then the NPL, LDR and ROA variables simultaneously have a significant effect on PBV. The partial test results show that the Non Performing Loan (NPL) and Loan to Deposit Ratio (LDR) negatively significant effects on profitability (ROA) and firm value (PBV), while the Profitability (ROA) variable has positively significant effects on the firm value (ROA) PBV). ROA capable to mediate the effect on NPL on PBV was shown by shown by sobel test. This study’s result shown that ROA information gives a good signal and good news for the owner and an investor so that it will provide prosperity to the owner in the form of an enhance in firm value.

Volume 11 | 12-Special Issue

Pages: 697-703

DOI: 10.5373/JARDCS/V11SP12/20193267