THE EFFECTS OF CREDIT RISK, LIQUIDITY RISK, AND PROFITABILITY, ON BANK CORPORATE VALUE LISTED ON THE IDX FOR THE 2018-2021PERIOD

Firm value is one of the things that becomes a factor before investors make
investment decisions. Changes in company value can occur due to several factors,
such as the level of credit risk, liquidity risk, and profitability. These factors can
affect the assessment of a bank, whether it is healthy or not. This study aims to
empirically prove the effect of credit risk, liquidity risk, and profitability on firm
value. The difference between this study and previous research is to use several
different measurement indicators on variables and add the NIM indicator to measure
profitability, which researchers rarely use these indicators.
Indicators for measuring company value use PBV, PER, and Tobin's Q. Credit
risk use NPL, liquidity risk is measured using LDR, and profitability is measured
using ROA and NIM. The theory used in this research is signal theory. Based on this
theory, a high company value signals to investors that the bank has good value
because it indicates that the bank has a good level of soundness.
The results of this study indicate that credit risk has no effect on firm value,
liquidity risk has an effect on firm value as measured using PBV, and Tobin's Q.
Profitability as measured using ROA has an effect on firm value as measured using
ROE. In contrast, NIM affects PBV and Tobin's Q.
This study has limitations, namely the short time of observations made, and
needs to consider other economic factors that can affect the value of banking
companies. Future researchers can increase the observation time and other factors that
can affect company value. Furthermore, the measurement of firm value can use other
indicators that are rarely used in previous studies.
Keywords: LDR, NIM, NPL, PBV, PER, ROA, Tobin’s Q.