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The Economics and Finance Letters

June 2018, Volume 5, 2, pp 58-71

The Effect of Internal and External Factors of Companies on Profitability and its Implications on Stock Price Index of State-Owned Banks

I Wayan Budi Artha

,

Bambang Mulyana

I Wayan Budi Artha 1 ,

Bambang Mulyana 1 
  1. Mercu Buana University, Master of Management Program, Raya Keranggan Street No. 6, Jatisampurna, Bekasi, Indonesia 1

Pages: 58-71

DOI: 10.18488/journal.29.2018.52.58.71

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Article History:

Received: 04 September, 2018
Revised: 09 October, 2018
Accepted: 13 November, 2018
Published: 07 December, 2018


Abstract:

This study aims to determine the effect of internal factors of the company (CAR, NPL, NIM, BOPO and CASA) and external factors of the company (inflation, economic growth and BI reference interest rates), both partially and jointly on the performance of State-Owned Banks measured with a Return on Assets ratio (ROA) and its implications on the Stock Price Index. The object of research is State-Owned Banks in the period of 2012 - 2017. The sampling technique is saturated sampling, that is, all members of the population are used as samples. The analysis technique used is Panel Data Regression. The results of this study indicate that CAR, NPL, NIM, BOPO, CASA, Inflation, Economic Growth and BI reference interest rate together have a significant effect on ROA. NIM, CASA and BI Reference Interest Rate partially had a positive and significant effect on ROA. BOPO, Inflation and Economic Growth partially have negative and significant effect on ROA. While CAR has a negative effect and NPL has a positive effect, but not significant on ROA. ROA has a negative and significant effect on Stock Price Index of State-Owned Banks.
Contribution/ Originality
This study contributes to the existing literature, useful for science in banking about the relationship between the company's internal and external factors on bank profitability and its implications for the Stock Price Index. In addition, adding literature in the financial sector is used as a guideline for subsequent research that will examine banking.

Keywords:

Internal factors, External factors, Profitability, Return on assets (ROA), Stock price index., State-Owned Banks.

Reference:


Statistics:

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Funding:

This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.

Acknowledgement:

Both authors contributed equally to the conception and design of the study.

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