The Effect of Loan to Deposit Ratio (LDR), Capital Adequacy Ratio

(CAR) and Return on Asset (ROA) against Stock Price

at Sharia Commercial Bank in Indonesia

Sri Rahayu, Heny Triastuti Kurnia Ningsih, Irma Zukhairani

Accounting Department, Faculty of Economics, UISU, Medan,

Keywords: LDR, CAR, ROA, Stock Price.

Abstract: The formulation of the problem in this research is how much influence of Loan to Deposit Ratio (LDR),

Capital Adequacy Ratio (CAR) and Return on Asset (ROA) to Stocks Price at Sharia Commercial Bank in

Indonesia. The method used in this research is descriptive causal method, that is research method done by

explaining cause-effect relationship by observing. Based on the results of the research, the simultaneous Loan

to Deposit Ratio (LDR), Capital Adequacy Ratio (CAR), and Return on Asset (ROA) have significant effect

to Stock price at Indonesian Sharia Commercial Bank. Partially Loan to Deposit Ratio (LDR) has significant

effect to Stock price at Indonesian Sharia Commercial Bank, Capital Adequacy Ratio (CAR) has a significant

negative effect to Stock price at Indonesian Sharia Commercial Bank and Return on Asset (ROA) has no

significant effect on Stock price at the Indonesian Sharia Commercial Bank.

1 INTRODUCTION

Stock prices are an indicator of the success of a

company's management. If the stock price of a

company always increases, investors or prospective

investors judge that the company is successful in

managing its business. Trust of investors and

prospective investors is very beneficial for the

issuers, because the more people believe in the

issuers, the desire to invest in issuers will be stronger.

The price of a stock in the capital market is

influenced by several factors, both internal and

external factors. Internal factors are those seen from

within the company that are specific to such stocks

such as sales, financial performance, management

performance, company conditions, and the industry in

which the company is engaged. While external

factors are those that are macro in influencing stock

prices in the stock such as inflation, interest rates,

foreign exchange rates, and non-economic factors

such as social conditions, politics, and other factors

(Martalena and Malinda, 2011).

Sharia banking as a Sharia financial institution,

initially grew slowly, but then began to show the

rapid development of achieving growth far above the

development of conventional banking. In Indonesia

Sharia banking has emerged since the issuance of

Law no. 7 of 1992 on Banking, which implicitly has

opened the opportunity of banking business activities

that have operational basis for the results, marked by

the establishment of Bank Muamalat Indonesia

(BMI).

Profit sharing is a common characteristic and

basic foundation for sharia bank operations as a

whole. Shari'a is the principle based on Al-

Mudharabah's rule. Based on this principle, Islamic

banks will serve as partners, both with savers and

with entrepreneurs who borrow funds. With savers,

banks will act as mudharib (fund manager), while

savers act as shahibulmaal (owner of funds). Between

the two held a mudharabah agreement stating the

distribution of benefits of each party. Similar to

conventional banking, sharia banking also relies on

depositors who keep their money in the bank.

Together with the increasing public knowledge of

sharia banking, the profit-sharing rate becomes one of

the incentives for depositors to keep their money in a

sharia bank.

The level of health of the banking itself can be

assessed from several indicators, one of the main

indicators used as a basis in the assessment is the

financial statements of the bank concerned. Based on

these financial statements, a number of financial

ratios that are commonly used as the basis for

Rahayu, S., Kurnia Ningsih, H. and Zukhairani, I.

The Effect of Loan to Deposit Ratio (LDR), Capital Adequacy Ratio (CAR) and Return on Asset (ROA) against Stock Price at Sharia Commercial Bank in Indonesia.

DOI: 10.5220/0008892406810685

In Proceedings of the 7th International Conference on Multidisciplinary Research (ICMR 2018) - , pages 681-685

ISBN: 978-989-758-437-4

681

assessment of bank soundness will be calculated. A

result of financial statement analysis will help to

interpret the various relationships and trends that can

provide a basis for consideration about the potential

success of a company in the future.

The performance shown by a banking system by

looking at the financial indicators is critical to the

performance of a bank. Health and financial stability

of banks can be seen from several financial indicators

such as Loan to Deposit Ratio (LDR) which is an

indicator of vulnerability and ability of a bank,

Capital Adequacy Ratio (CAR) is the ratio of bank

performance to measure the capital adequacy of

banks to support assets containing or generate a risk

(Fahmi, 2015), and Return On Assets (ROA) is the

company's financial ratios associated with the profit

potential of measuring the strength of the company

resulting in profits or earnings at the level of income,

assets and also specific stock capital.

1.1 Theoretical Basis

The bank comes from the word bangue (French) and

from the word banco (Italian) which means a chest/

cupboard or bench. The crates and benches explain

the basic functions of commercial banks, namely:

first, providing a place for safe keeping functions;

second, providing a means of payment to purchase

goods and services (Antonio, 2009).

Sharia bank is a financial institution needed by the

community in conducting financial transactions and

other banking transactions. The transactions offered

by the bank differ from bank to bank. Some Islamic

banks offer all banking products, some sharia banks

offer only certain products and so on. Products and

services of sharia banks that can be given to the

community depend on the type (Ismail, 2011).

It is in contrast to a bank conducting its activities

in a conventional manner, and providing services in

general payment traffic based on procedures and

provisions that have been applied under positive law.

Islamic banking acts as a financial intermediary

institution between economic units that have excess

funds with other units that are under-funded.

Therefore, to implement the intermediation function,

sharia pigment institutions will conduct business

activities in the form of collecting funds, channeling

funds, and providing various financial transaction

services to the community (Burhanuddin, 2010).

1.2 Stock Price

Stock is a piece of paper showing the right of the

investor who owns the paper to obtain a share of the

prospect or wealth of the organization issuing the

securities, and the conditions under which the

investor may exercise his right (Husnan, 2008).

Stock is one of the most favored capital market

instruments by investors because it is able to provide

an attractive rate of return. Stocks are clearly stated

papers of nominal value, name of company, and

followed by rights and obligations which have been

explained to each holder (Fahmi, 2012).

Stock (share) is a sign of participation or

possession of a person or entity within a company or

limited liability company. The stock is a piece of

paper explaining that the paper owner is the owner of

the company issuing the securities (Darmadji and

Fakhruddin, 2012).

1.3 Loan to Deposit Ratio (LDR)

Definition of Loan to Deposit Ratio according to

Bank Indonesia Regulation Number 15/7 / PBI / 2013

concerning Statutory Reserves of Commercial Banks

at Bank Indonesia in Rupiah and Foreign Currency is

the ratio of credits extended to third parties in Rupiah

and foreign currency, excluding credit to Bank third

party funds covering demand deposits, savings

deposits and time deposits in Rupiah and foreign

currency, excluding interbank funds. Loan to Deposit

Ratio means to demonstrate the ability of banks in

providing funds to debtors with capital owned by

banks and funds collected from the community

1.4 Capital Adequacy Ratio (CAR)

Capital Adequacy Ratio (CAR) is a ratio showing

how far all bank assets that contain credit risk,

inclusion, securities, and claims to other banks are

financed from the bank's own capital funds. Besides,

it obtains funds from sources outside the bank, such

as funds from the community, loans, and others.

Capital Adequacy Ratio (CAR) is an indicator of the

bank's ability to cover its decline in assets as a resultof

bank losses caused by risky assets (Darmawi, 2011).

According to Cashmir (Cashmir, 2014), Capital

Adequacy Ratio (CAR) is the ratio between the ratios

of capital to Risk Weighted Assets according to

government regulations. In principle, the level of

Capital Adequacy Ratio (CAR) is adjusted to the

provisions of the Capital Adequacy Ratio (CAR) that

apply internationally that is in accordance with the

standards issued by the Bank for Settlement Ratio

(BIS). The increase of Capital Adequacy Ratio

(CAR) aims to improve performance and to ensure

prudential banking principles have always been

ensured.

ICMR 2018 - International Conference on Multidisciplinary Research

682

1.5 Return on Assets (ROA)

According to Horne and Wachowicz (2012), Return

on Assets (ROA) is a measure of overall effectiveness

in generating profits through available assets; power

to generate profits from invested capital. Horne and

Wachowicz calculate Return on Assets (ROA) using

the net income formula after tax divided by total

assets.

Bambang Riyanto (Bambang Riyanto, 2012)

mentions the term Return on Assets (ROA) with Net

Earning Power Ratio (Rate of Return on Investment /

ROI) is the ability of the capital invested in the overall

assets to generate net profit. The net profit he means

is the net profit after tax

2 METHODOLOGY

2.1 Population and Sample of the

Study

According to Kuncoro (Kuncoro, 2009), population

is a complete group of elements, usually in the form

of people, objects, transactions or events in which we

are interested to learn or become the object of

research. Based on the explanation that has been

presented, the population in this study is tabulation of

financialdata of Sharia Commercial Banks in

Indonesia listed on the Indonesia Stock Exchange

period 2014-2016, and data is taken online from the

site www.idx.co.id which amounted to 10 Indonesian

ShariaCommercialBank.

In this research, sampling using purposive

sampling. Purposive sampling is one of the non-

random sampling techniques where the researcher

determines the sampling by determining the specific

characteristics which is suitable with the research

objectives so that it is expected to answer the research

problem. According to Sugiyono (2012) purposive

sampling is a technique to determine the sample of

research with some considerations which aim to

ensure that the data obtained later can be more

representative.

2.2 Data Analysis Technique

Multiple linear regression analysis in this study aims

to determine the magnitude of the influence of

independent variables of LDR, CAR, and ROA to the

dependent variable that is Stock price. In this study,

the authors use multiple linear regression statistical

analysis. The equations used are:

Y = a + b

+ b

+ e (1)

Information:

Y = Stock Price

a = Constants

b1b2 = Multiple regression coefficients

X1 = LDR dimension score

X2 = CAR dimension scores

X3 = ROA dimension score

e = Standard error

3 RESULT

3.1 Multiple Linear Regression Test

Results of multiple linear regression analysis test in

this study can be seen in table 1 as follows:

Table 1: Results of Multiple Linear Regression Test.

Coefficients

Model

Unstandardized

Coefficients

Standardized

Coefficients

T Sig.B

Std.

Erro

Beta

(

Constant

)

6357,748 1437,815 4,422 ,000

LDR

3910,661 1159,450 ,571 3,373 ,002

CAR

-398,370 110,007 -,713

3,621

,001

ROA 694,934 412,429 ,306 1,685 ,104

a. De

endentVariable: Stock Price

Source: Data Processed with SPSS

Based on the results of multiple linear regression

test in table 1 above can be described as follows:

Y = 6357,74 + 3910,66X

- 398,37X

+ 694,93X

+ e

(2)

3.2 Hypothesis Testing

3.2.1 Partial Significance Test (t-Test)

The result of partial significance test (t-test) in this

research can be seen in table 2 as follows:

The Effect of Loan to Deposit Ratio (LDR), Capital Adequacy Ratio (CAR) and Return on Asset (ROA) against Stock Price at Sharia

Commercial Bank in Indonesia

683

Table 2: Results of Partial Significance Test (t-Test).

Coefficients

Model

UnstandardizedCoef

ficients

Standardized

Coefficients

T Si

.B Std. Erro

Beta

1(Consta

nt)

6357,748 1437,815 4,422 ,000

LDR 3910,661 1159,450 ,571 3,373 ,002

CAR -398,370 110,007 -,713 -3,621 ,001

ROA 694,934 412,429 ,306 1,685 ,104

a. DependentVariable: Stock Price

Source: Data Processed with SPSS

Based on the results of partial significance test (t-

test) in table 2 above, it can be described that Loanto

Deposit Ratio (LDR) has a t-count of 3.373> t-

table1,703 and significance level of 0.00 <0.05.

Further, it can be concluded that Loanto Deposit

Ratio (LDR) has a significant positive effect on Stock

price at Indonesian Sharia Commercial Bank. Capital

Adequacy Ratio (CAR) has t-count value of -3,621>

t-table-1.703 with significance level of 0.00 <0.05,

and it can be concluded that Capital Adequacy Ratio

CAR) have a significant negative effect on Stock

price at Indonesian Sharia Commercial Bank. Return

on Asset (ROA) has a t-count of 1,685 <t-table 1,703

and a significance level of 0.10> 0.05. Further, it can

be concluded that ReturnonAsset (ROA) has no

significant effect on Stock price at Indonesian Sharia

Commercial Bank.

3.2.2 Simultaneous Significance Test

(F-Test)

The result of simultaneous significance test (Test-F)

in this research can be seen in table 3 below:

Table 3: Results of Simultaneous Significance Test (F-

Test).

ANOVA

Model Sum ofS

uares df MeanS

uare F Si

1Re

ression 95216683,235 3 31738894,412 5,940 ,003

Residual 138918166,232 26 5343006,394

Total 234134849,467 29

a. DependentVariable: Stoc

Price

. Predictors:

(

Constant

)

, ROA, LDR, CAR

Source: Data Processed with SPSS

Based on the results of the simultaneous

significance test (Test-F) in table 3 above, it can be

seen that the Loan Deposit Ratio (LDR), Capital

Adequacy Ratio (CAR), and Return On Assets

(ROA) of 5.940> F-table 2.96 with significance level

0,00 <0,05, it can be concluded that simultaneously

Loan to Deposit Ratio (LDR), Capital Adequacy

Ratio (CAR), and Return On Asset (ROA) have

significant effect to Stocks Price at Indonesian Sharia

Commercial Bank.

4 ANALYSIS

4.1 The Effect of Loanto Deposit Ratio

(LDR) on Stock Price at Indonesian

Sharia Commercial Bank

Based on the results of this study, it is concluded that

the high or low value of Loanto Deposit Ratio (LDR)

greatly affects the value of Stocks Price at Indonesian

Sharia Commercial Bank. When the Loanto Deposit

Ratio (LDR) rises, the value of the stock price will

also rise, and if the Loanto Deposit Ratio (LDR)

decreases, then the value of the Stock price will also

come down. Loanto Deposit Ratio (LDR) in this

study has a significant partial influence, because

Loanto Deposit Ratio (LDR) gives a fairly high

assumption of value to the Stock price.

The results of this study are also in line with the

results of research conducted by Dian Fordian (Dian

Fordian, 2017), the results of his research states that

the Loan to Deposit Ratio (LDR) effect on Stock

price.

4.2 The Influence of Capital Adequacy

Ratio (CAR) on Stock Price at

Indonesian Sharia Commercial

Bank

Based on the results of this study, it is concluded that

the high value of Capital Adequacy Ratio (CAR) will

affect the value of Stocks Price at Indonesian Sharia

Commercial Bank. When the value of the Capital

Adequacy Ratio (LDR) rises, the value of the stock

price will decrease due to significant negative effect,

and if the value of Capital Adequacy Ratio (CAR)

decreases, the value of stock price will rise with

positive value.

Capital Adequacy Ratio (CAR) in this research

has a partial effect because Capital Adequacy Ratio

(CAR) gives the assumption of high negative value to

stock price.

The results of this study are also in line with the

those of research conducted by Diah Purnamasari et

al (Diah Purnamasari et al, 2017), in which the result

of their research states that Capital Adequacy Ratio

(CAR) has a negative effect on stock prices.

ICMR 2018 - International Conference on Multidisciplinary Research

684

4.3 The Influence of Return on Assets

(ROA) on Stock Price at

Indonesian Sharia Commercial

Bank

Based on the results of this study, it is concluded that

the high or low value of Return on Assets (ROA) does

not affect the value of stocks of Sharia Banks in

Indonesia. When the value of Return on Assets

(ROA) falls, the stock price will not go down, and if

the value of Return on Assets (ROA) rises, the value

of the share price will also not go up.

Return on Asset (ROA) has no partial effect

because Return on Asset (ROA) only gives low value

assumption to increase of Stock Price compared with

Capital Adequacy Ratio (CAR). The result of this

research is also in line with that of research conducted

by Y. Sunyoto and Sam'ani (Y. Sunyoto and Sam'ani,

2014) in which the result of their research states that

Return on Assets (ROA) has no effect on Stock Price.

5 CONCLUSIONS

Based on the results of this study, the conclusions can

be described as the following:

1. Partially Loan to Deposit Ratio (LDR) has a

significant effect on Stock Price at Indonesian

Sharia Commercial Bank. When the Loan to

Deposit Ratio (LDR) drops, the value of the

stock price will come down too, and if the Loan

to Deposit Ratio (LDR) rises, then the value of

the Stock Price will also rise.

2. Partially Capital Adequacy Ratio (CAR) has a

significant negative effect on Stock Price at

Indonesian Sharia Commercial Bank. When the

value of the Capital Adequacy Ratio (LDR)

falls, the value of the stock price will rise, and if

the Capital Adequacy Ratio CAR value rises,

then the value of the Stock Price will decrease.

This is due to Capital Adequacy Ratio (CAR)

has a significant negative effect on Stock Price.

3. Partially Return on Asset (ROA) has no effect

on Stock Price at Sharia Indonesia Commercial

Bank. When the value of Return on Assets

(ROA) falls, the value of stock price will not

come down, and if the value of Return on Assets

(ROA) increases, the value of stock price will

also not go up.

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The Effect of Loan to Deposit Ratio (LDR), Capital Adequacy Ratio (CAR) and Return on Asset (ROA) against Stock Price at Sharia

Commercial Bank in Indonesia

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