<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>Banks play an essential role in the economy, therefore, their performance must be maintained. Compared to other business sectors, the banking sector has continually achieved the greatest market shares over several periods. When a bank becomes more efficient, it can raise its income and market prices as well as investor confidence. This study examines various factors that influence operational efficiency and the implication for market prices. In 2016 – 2021 years, 28 banking companies were sampled from all banking companies listed on the Indonesia Stock Exchange. Purposive sampling was used for data collection, and linear multiple regression was used for data processing by running tests such as descriptive statistics, determination, regression equations, hypotheses, and implications. The findings reveal a statistically significant relationship between a firm’s size, capital adequacy, loan-to-deposit ratio, net interest, and inflation with operational efficiency, while non-performing loans and exchange rates have no a substantial impact. Additionally, capital adequacy, loan-to-deposit ratio, inflation, and exchange rates had statistically significant effects on market prices, although operational efficiency, non-performing loans, and net interest did not. The mediating analysis reveals that there is no interaction between non-performing loans and net interest with market prices, but it is a mediator for other variables. The research is important for a variety of stakeholders, including managers, investors, and policymakers, who are interested in resolving banking business operations, increasing financial performance, and preserving market prices by establishing mitigation strategies related to specific-internal and external factors.</p>
</abstract>

Banks play an essential role in the economy, therefore, their performance must be maintained. Compared to other business sectors, the banking sector has continually achieved the greatest market shares over several periods. When a bank becomes more efficient, it can raise its income and market prices as well as investor confidence. This study examines various factors that influence operational efficiency and the implication for market prices. In 2016 – 2021 years, 28 banking companies were sampled from all banking companies listed on the Indonesia Stock Exchange. Purposive sampling was used for data collection, and linear multiple regression was used for data processing by running tests such as descriptive statistics, determination, regression equations, hypotheses, and implications. The findings reveal a statistically significant relationship between a firm’s size, capital adequacy, loan-to-deposit ratio, net interest, and inflation with operational efficiency, while non-performing loans and exchange rates have no a substantial impact. Additionally, capital adequacy, loan-to-deposit ratio, inflation, and exchange rates had statistically significant effects on market prices, although operational efficiency, non-performing loans, and net interest did not. The mediating analysis reveals that there is no interaction between non-performing loans and net interest with market prices, but it is a mediator for other variables. The research is important for a variety of stakeholders, including managers, investors, and policymakers, who are interested in resolving banking business operations, increasing financial performance, and preserving market prices by establishing mitigation strategies related to specific-internal and external factors.

Determinants of Banking Operational Efficiency and the Relationship Between the Factors to Market Price: Evidence from Indonesia

ECONOMICS

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Banks play an essential role in the economy, therefore, their performance must be maintained. Compared to other business sectors, the banking sector has...

Determinants of Banking Operational Efficiency and the Relationship Between the Factors to Market Price: Evidence from Indonesia

Data publikacji: 27 wrz 2023

Zakres stron: 153 - 168

Otrzymano: 15 lip 2023

Przyjęty: 28 paź 2023

DOI: https://doi.org/10.2478/eoik-2023-0051

Słowa kluczowe
size, shares, capital, deposit, performing, interest, inflation, currency

© 2023 Pariang Siagian, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Determinants of Banking Operational Efficiency and the Relationship Between the Factors to Market Price: Evidence from Indonesia

Data publikacji: 27 wrz 2023

Zakres stron: 153 - 168

Otrzymano: 15 lip 2023

Przyjęty: 28 paź 2023

DOI: https://doi.org/10.2478/eoik-2023-0051

Słowa kluczowesize, shares, capital, deposit, performing, interest, inflation, currency

© 2023 Pariang Siagian, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Słowa kluczowe
size, shares, capital, deposit, performing, interest, inflation, currency