Vol. 14 (02) pp. 686-697 DOI: 10.21474/IJAR01/22777

DETERMINANTS OF PROFITABILITY AND ITS IMPLICATIONS FOR FIRM VALUE WITH FIRM SIZE AS A MODERATING VARIABLE (STUDY ON FOREIGN EXCHANGE COMMERCIAL BANKS LISTED ON THE INDONESIA STOCK EXCHANGE DURING 2016-2022)

  • Master of Management, Postgraduate, Universitas Pasundan, Bandung, Indonesia.
  • Business Administration Study Program, International Women University, Bandung Indonesia.
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Abstract

This study aims to analyze the determinants of profitability and their implications for firm value with firm size as a moderating variable in foreign exchange commercial banks listed on the Indonesia Stock Exchange during 2016-2022. This research employs a quantitative causal approach using panel data regression analysis. The sample consists of 20 banks selected through purposive sampling. The independent variables include capital adequacy (CAR), non-performing loans (NPL), liquidity (LDR), operational efficiency (BOPO), and capital structure (DER). Profitability is proxied by Return on Assets (ROA), while firm value is measured by Tobins Q. The results indicate that CAR,NPL,LDR, BOPO, and DER simultaneously have a significant effect on profitability. Partially, CAR, LDR, and DER have positive and significant effects on profitability, while NPL and BOPO negatively and significantly affect profitability. Furthermore, profitability has a positive and significant effect on firm value. Firm size significantly moderates the relationship between profitability and firm value, indicating that larger banks are more effective in translating profitability into higher market valuation. These findings highlight the importance of strengthening capital adequacy, improving credit risk management, optimizing liquidity utilization, enhancing operational efficiency, and managing leverage prudently to improve profitability and firm value in the Indonesian banking sector.

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How to Cite This Article

Yusni Nuyani, Azhar Affandi and Liza Laila Nurwulan (2026); DETERMINANTS OF PROFITABILITY AND ITS IMPLICATIONS FOR FIRM VALUE WITH FIRM SIZE AS A MODERATING VARIABLE (STUDY ON FOREIGN EXCHANGE COMMERCIAL BANKS LISTED ON THE INDONESIA STOCK EXCHANGE DURING 2016-2022), International Journal of Advanced Research (IJAR), 14 (02), 686-697, ISSN 2320-5407. DOI: https://doi.org/10.21474/IJAR01/22777

Corresponding Author

Yusni Nuyan
Universitas Pasundan
Indonesia

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