Influence of Liquidity, Profitability, Inflation and Interest Rates on Stock Prices in The Indonesian Islamic Banking Sector 2019-2022

Abstract

Islamic banks play an important role in supporting economic growth through financing the real sector and various development initiatives. However, in certain periods, the stock prices of Islamic banks in Indonesia have decreased due to micro and macroeconomic factors. This study examines how liquidity, profitability, inflation, and interest rates affect the stock prices of Indonesian Islamic banks, aiming to improve stock performance and support economic growth. The study uses a quantitative approach with secondary data from the Indonesia Stock Exchange (IDX), and uses an unbalanced panel data regression method. The results show that both micro and macro factors influence stock prices. Specifically, the Current Ratio (CR) significantly negatively affects stock prices, Return on Equity (ROE) has a significant positive effect, while Inflation and Interest Rate have no significant impact when considered individually. This study provides new insights into the dynamics of stock prices in Islamic banks and highlights the importance of integrating micro and macro factors in financial analysis.