Analyzing Banking Firms: Impacts of Credit, Currency Conversion Rates, Mortgage Rates on Equity Yields with Profit Margins

Abstract

Using profit margins as an intermediate variable, this research examines the effects of credit risk (X1), exchange rate risk (X2), and mortgage rates (X3) on equity yields in the context of banking businesses listed between 2020 and 2022 on the Bursa Efek Indonesia (BEI). A purposive sampling approach was used to determine the sample size, which was 43 firms. Path analysis and the Sobel Z test were applied to the data. The findings of the investigation may be summed up as follows: (1) The statistical significance of credit risk's impact on profit margins is shown by its p-value of 0.001, which is below the 0.05 cutoff. With a p-value more than 0.05, mortgage rates, however, do not show a statistically significant impact on profit margins. Moreover, a p-value greater than 0.05 indicates that profit margins do not substantially impact equity yields. (4) With a p-value >ccr0.05, credit risk has no discernible effect on equity yields. (5) In contrast, with a p-value smaller than 0.05, mortgage rates have a substantial impact on equity yields. (6) The Z-Sobel result drops below 1.96 at -0.87363822, indicating that credit risk does not directly influence equity yields via profit margins after doing an indirect impact analysis using Sobel's Z test route analysis. (7) In a similar vein, the Z-Sobel result of 0.35789034 stays below 1.96, indicating that mortgage rates do not directly affect equity yields via profit margins in the indirect impact study conducted using Sobel's Z-test route analysis.