The Effect of Investment, Funding, Dividend, Liquidity, and Interest Rate on Firm Value in Indonesian Banking Sector

Abstract

This study aims to analyze the effect of investment decisions, funding decisions, dividend policy, liquidity, and interest rates (BI Rate) on banking sector companies listed on the Indonesia Stock Exchange for the period 2019–2023. The population in this study consists of 43 conventional banks listed on the Indonesia Stock Exchange during the 2019–2025 period. The sampling technique used in this study is purposive sampling, resulting in a sample of 7 banking companies listed on the IDX from 2019 to 2023. The data analysis method employed is multiple linear regression analysis using IBM SPSS Statistics 26. The results of the study show that investment decisions have a partially significant effect on firm value, and funding decisions also have a partially significant effect on firm value. Dividend policy, liquidity, and interest rates do not have a significant effect on firm value. Simultaneously investment decisions, funding decisions, dividend policy, liquidity, and interest rates simultaneously influence firm value. These results suggest that although not all financial variables exert individual influence, banking firms must adopt an integrated approach to financial decision-making in order to enhance firm value through more effective strategic planning.

Keywords: Investment Decisions, Funding Decisions, Loan to Deposit Ratio, BI Rate, Firm Value