Proceedings of the 2nd International Conference on Economics, Business, and Government Challenges, EBGC 2019, 3 October, UPN " Veteran" East Java, Surabaya, Indonesia

Research Article

Assessing Financial Performance Based On Fundamental Factors From The Perspective Of The Signaling Hypothesis

  • @INPROCEEDINGS{10.4108/eai.3-10-2019.2291921,
        author={Yuniningsih  Yuniningsih and Eko  Purwanto and Bowo  Santoso and Siti  Aminah and Egan Evanzha Yudha Amriel},
        title={Assessing Financial Performance Based On Fundamental Factors From The Perspective Of The Signaling Hypothesis},
        proceedings={Proceedings of the 2nd International Conference on Economics, Business, and Government Challenges, EBGC 2019, 3 October, UPN " Veteran" East Java, Surabaya, Indonesia},
        publisher={EAI},
        proceedings_a={EBGC},
        year={2020},
        month={2},
        keywords={financial performance fundamental factors signaling hypothesis funding banking},
        doi={10.4108/eai.3-10-2019.2291921}
    }
    
  • Yuniningsih Yuniningsih
    Eko Purwanto
    Bowo Santoso
    Siti Aminah
    Egan Evanzha Yudha Amriel
    Year: 2020
    Assessing Financial Performance Based On Fundamental Factors From The Perspective Of The Signaling Hypothesis
    EBGC
    EAI
    DOI: 10.4108/eai.3-10-2019.2291921
Yuniningsih Yuniningsih1,*, Eko Purwanto1, Bowo Santoso1, Siti Aminah1, Egan Evanzha Yudha Amriel1
  • 1: Faculty of Economic and Business, Universitas Pembangunan Nasional”Veteran” East Java, Indonesia
*Contact email: yuniningsih@upnjatim.ac.id

Abstract

Economic activity will be greatly influenced by how much funding sources are available financial institutions, especially from banks. This study aims to measure how much financial performance of Indonesian banks is influenced by financial fundamental factors. The analytical tool used to test hypotheses is using multiple linear regression. This research has fulfilled the normality test and classic assumptions which were carried out before the hypothesis test. The fundamental variable in this study uses financial performance as measured by Return On Investment (ROI) as the dependent variable. While the independent variables used are Net Interest Margin (NIM), Non Performing Loans (NPL), Loan to Deposit Ratio (LDR), and operational cost and income (CIO). The sample uses secondary data from 25 Indonesian banks listed on the Indonesia Stock Exchange in 2015-2018. The results showed that only the variable cost and operating income (CIO) had a significant influence on the company's financial performance. While the three other fundamental factors from NIM, LDR and NPL have no impact at all on financial performance. These results indicate the limitations of this study that the ratios used do not fully describe the dominant factors in evaluating financial performance.