CAPITAL ADEQUACY, CREDIT DISTRIBUTION AND BANKING STOCK RETURN: EVIDENCE FROM LQ45 INDEX
DOI:
https://doi.org/10.55197/qjssh.v6i3.704Keywords:
banks capital adequacy, credit distribution, stock return, loan-to-deposit ratioAbstract
Banking is one of the financial industry types in the Indonesian capital market. This industry comprises the banks that must comply with the regulations. The compliance will determine the stock price movement, reflecting public investor wealth. Hence, this study aims to verify and analyze the effect of capital adequacy and credit distribution on stock return. Besides, it intends to check and evaluate the impact of capital adequacy on credit distribution. The samples are all banks consistently selected to be the LQ45 index from 2019 to 2023. Then, this study uses the path analysis model to test the coefficients. By mentioning the statistical output, this study concludes that the more capital adequacy and credit distribution the banks have, the higher the stock return. Conversely, the more credit distribution, the less the stock return. Therefore, public investors should purchase banking stocks by considering the increasing tendency of capital adequacy and loan-to-deposit ratios to get positive returns.
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