Influence of Return on Assets and Return on Equity on Price-to-Book Value, with Capital Adequacy Ratio as a Moderating Variable: A Study of Conventional Private Banks in Indonesia Listed on the Indonesia Stock Exchange During 2014–2023
DOI:
https://doi.org/10.37638/bima.6.1.427-438Keywords:
Return on Assets, Return On Equity, Price To Book Value, Capital Adequacy Ratio, Indonesian private banks.Abstract
Purpose: This research investigates how Return on Assets (ROA) and Return on Equity (ROE) influence the Price-to-Book Value (PBV), with the Capital Adequacy Ratio (CAR) acting as a moderating factor, using data from Indonesian private conventional banks over the period 2014 to 2023. Methodology: Utilizing a quantitative methodology and a descriptive-verificative framework, this study analyzes data sourced from the annual reports of banks listed on the Indonesia Stock Exchange. The analysis was carried out using multiple linear regression and moderated regression analysis (MRA), processed with IBM SPSS Statistics 26 software. Results: ROA and ROE have a significant effect on PBV. CAR moderates the relationship between ROA and PBV but does not significantly moderate the effect of ROE on PBV. Findings: Strong capital adequacy enhances the influence of profitability, especially ROA, on bank market valuation. Novelty: This study emphasizes the role of CAR in strengthening the impact of ROA on PBV within the post-pandemic banking environment. Originality: It provides insight into how market perception of profitability is shaped by capital strength in Indonesian private banks amid economic uncertainty. Conclusion: Effective management of assets, equity, and capital is essential to improve market perception and competitiveness. Type of Paper: Research Paper.References
Badruzaman, J., Fadilah, A. R., & Abdurrahman, F. (2022). Determining the Effect of Return on Equity (ROE) on Price Earnings Ratio (PER) and Price to Book Value (PBV) in LQ45 companies, Indonesia. WSEAS Transactions on Business and Economics, 19, 1564–1575. https://doi.org/10.37394/23207.2022.19.141
Ery Yanto, Irene Christy, & Pandu Adi Cakranegara. (2021). The Influences of Return on Asset, Return on Equity, Net Profit Margin, Debt Equity Ratio and Current Ratio Toward Stock Price. International Journal of Science, Technology & Management, 2(1), 300–312. https://doi.org/10.46729/ijstm.v2i1.155
Farhan Saputra. (2022). Analysis Effect Return on Assets (ROA), Return on Equity (ROE) and Price Earning Ratio (PER) on Stock Prices of Coal Companies in the Indonesia Stock Exchange (IDX) Period 2018-2021. DIJEFA: Dinasti Internasional Journal of Economics, Finance and Accounting, 3(1), 82–94. https://doi.org/10.38035/dijefa.v3i1.1238
Freddy, & Toni, N. (2020). The Effect of Return on Equity , Net Interest Margin , Loan to Funding Ratio , Capital Adequacy Ratio , Debt to Equity Ratio and Non Performing Loan on Price to Book Value in Banking Industry Listed on the Indonesia Stock Exchange. International Journal of Research and Review, 7(9), 242.
Husna, A., & Satria, I. (2019). Effects of Return on Asset, Debt To Asset Ratio, Current Ratio, Firm Size, and Dividend Payout Ratio on Firm Value. International Journal of Economics and Financial Issues, 9(5), 50–54. https://doi.org/10.32479/ijefi.8595
Ikhsan, M., Jumono, S., Munandar, A., & Abdurrahman, A. (2022). The Effect of Non Performing Loan (NPL), Independent Commissioner (KMI), and Capital Adequacy Ratio (CAR) on Firm Value (PBV) Mediated by Return on Asset (ROA). Quantitative Economics and Management Studies, 3(5), 810–824. https://doi.org/10.35877/454ri.qems1063
Iskandar, Y. (2021). Pengaruh Net Interest Margin, Return On Equity, Return On Asset, Capital Adequacy Ratio terhadap Price Book Value Pada Bank Umum di Indonesia. DIALEKTIKA : Jurnal Ekonomi Dan Ilmu Sosial, 6(1), 9–16. https://doi.org/10.36636/dialektika.v6i1.592
Jang, J., & Kang, J. (2019). Probability of price crashes, rational speculative bubbles, and the cross-section of stock returns. Journal of Financial Economics, 132(1), 222–247. https://doi.org/10.1016/j.jfineco.2018.10.005
Khairi, M. R., Atika, & Rahmani, N. A. B. (2024). The Effect of Return on Equity, Capital Adequacy Ratio and Financing to Deposit Ratio on Return on Assets of PT. Bank Muamalat Tbk Mhd. Ilomata International Journal of Management, 5(4), 1154–1172. https://doi.org/10.61194/ijjm.v5i4.1274
Khan, A., Rahayu, C. W. E., & Rahmawati, C. H. T. (2024). The Effect of Financial Ratios on Stock Returns: By Mediation of Price Earning Ratio. Kinerja, 28(1), 23–40. https://doi.org/10.24002/kinerja.v28i1.7826
Kim, R. (2020). Dividend reputation, dividend yield and stock returns in Korea. Journal of Derivatives and Quantitative Studies, 29(1), 73–99. https://doi.org/10.1108/JDQS-09-2020-0023
Kyere, M., & Ausloos, M. (2021). Corporate governance and firms financial performance inthe United Kingdom. International Journal of Finance & Economics, 1(26), 1871–1885. https://doi.org/10.1002/ijfe.1883
Lusiana, H. (2020). The Effect of Return on Equity (ROE) and Earning per Share (EPS) on Stock Prices In Indonesia Stock Exchange 2015-2018. Ilomata International Journal of Tax and Accounting, 1(3), 132–138. https://doi.org/10.52728/ijtc.v1i3.92
Martadinata, I. P. H., Supiyanto, Y., Adipta, M., Rozali, M., & Idris, A. (2023). Dasar-Dasar Manajemen Keuangan. In Journal of Physics A: Mathematical and Theoretical (Vol. 44, Issue 8). https://doi.org/10.1088/1751-8113/44/8/085201
Nguyen, H. (2023). Credit Risk and Financial Performance of Commercial Banks : Evidence from Vietnam. Quantitative Finance, 49. https://doi.org/10.48550/arxiv.2304.08217
Öztürk, H. (2017). The Relationship Between Earnings-to-Price, Current Ratio, Profit Margin and Return: An Empirical Analysis on Istanbul Stock Exchange. Accounting and Finance Research, 7(1), 109. https://doi.org/10.5430/afr.v7n1p109
Rahman, F. (2022). Impact of WACC on Firm Profitability: Evidence from the Food and Allied Industry of Bangladesh. European Journal of Business and Management Research, 7(6), 89–92. https://doi.org/10.24018/ejbmr.2022.7.6.1707
Rossela, E., Ginting, B., & Sussanto, H. (2024). The Impact of Return on Asset ( ROA ), Capital Adequacy Ratio ( CAR ), Price-Earnings Ratio ( PER ), and Price-To-Book Value ( PBV ) on Stock Prices of Banking Companies Listed on the LQ45 Index during 2019- 2023. 07(10), 6199–6206. https://doi.org/10.47191/jefms/v7
Ruzgar, N. S. (2025). Impact of Indices on Stock Price Volatility of BRICS Countries During Crises: Comparative Study. International Journal of Financial Studies, 13(1). https://doi.org/10.3390/ijfs13010008
Sari, R. (2021). Analysis of the Effect of Earnings per share, Price earning ratio and Price to book value on the stock prices of state-owned enterprises. Golden Ratio of Finance Management, 1(1), 25–32. https://doi.org/10.52970/grfm.v1i1.117
Smyth, R., & Narayan, P. K. (2018). What do we know about oil prices and stock returns? International Review of Financial Analysis, 57, 148–156. https://doi.org/10.1016/j.irfa.2018.03.010
Takamatsu, R. T., & Lopes Fávero, L. P. (2019). Financial indicators, informational environment of emerging markets and stock returns. RAUSP Management Journal, 54(3), 253–268. https://doi.org/10.1108/RAUSP-10-2018-0102
Tamara, D., Heraini, N., & Ivan, D. (2022). Determinants of Bank Capital Structure: Evidence From Indonesia. Ultimaccounting Jurnal Ilmu Akuntansi, 9(2), 145–161. https://doi.org/10.31937/akuntansi.v14i1.2619
Tut, D. (2023). Debt dynamic, debt dispersion and corporate governance. International Journal of Managerial Finance, 19(4), 744–771. https://doi.org/10.1108/IJMF-10-2021-0522
Zaki, A. (2023). Pengaruh Kinerja Keuangan terhadap Price Book Value disaat Pandemi Covid-19 pada Bank Umum di Indonesia. JMK (Jurnal Manajemen Dan Kewirausahaan), 8(1), 80. https://doi.org/10.32503/jmk.v8i1.3158
Downloads
Additional Files
Published
Issue
Section
License
An author who publishes in the BIMA JOURNAL: Business, Management, and Accounting Journal agrees to the following terms:
Author retains the copyright and grants the journal the right of first publication of the work simultaneously licensed under the Creative Commons Attribution-ShareAlike 4.0 License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal
Submission of a manuscript implies that the submitted work has not been published before (except as part of a thesis or report, or abstract); that it is not under consideration for publication elsewhere; that its publication has been approved by all co-authors. If and when the manuscript is accepted for publication, the author(s) still hold the copyright and retain publishing rights without restrictions. For the new invention, authors are suggested to manage its patent before published. The license type is CC-BY-SA 4.0.
BIMA JOURNAL: Business, Management and Accounting is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
You are free to:
Share — copy and redistribute the material in any medium or format
Adapt — remix, transform, and build upon the material
for any purpose, even commercially.
The licensor cannot revoke these freedoms as long as you follow the license terms.
Under the following terms:
Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
ShareAlike — If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original.
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
Notices:
- You do not have to comply with the license for elements of the material in the public domain or where your use is permitted by an applicable exception or limitation.
- No warranties are given. The license may not give you all of the permissions necessary for your intended use. For example, other rights such as publicity, privacy, or moral rights may limit how you use the material.
