Abstract
The bank’s financial report is the only lead for the public c to review, evaluate, and assess the soundness of a bank. By tinkering the available figures within the monthly financial reports, we have measured 52 variables comprised of the common indicators to calculate the effects of financial performance of the bank, its financial distress, to its stock price in the market. The common indicators used are the ratios of liquidity, rentability, and solvability. The bankruptcy prediction and financial distress indicators were considered to part ofthe solvability ratios. The data observed and collected was between January 2002 to 18 July 2017. The time lag and IPO as of 10 November 2003 reduced the eligibility of monthly financial reports, leaving the data usable for the period of November 2003 to April 2017. As 10 variables were excluded by the system, only 4 of42 variables were found to be significantly affecting the stock price variable. The 4 independent variables are market capitalization, the ratio of placement in BI to the third-party fund, debt to equity ratio, and debtto asset ratio.
Highlights
Stock price is very vulnerable to any disseminated information
The dynamics of stock price are determined by many factors
Analytical framework for this study describe in igure 2
Summary
Stock price is very vulnerable to any disseminated information. Any decrease in stock price can erode bank’s capital exponentially. As the stock price luctuates, so does the bank’s capital. Likewise the bank’s productive assets, either in value and/or quality in terms of loan disbursements, deals in the inter-bank money market, and in the clearing process with Bank Indonesia (BI). The dynamics of stock price are determined by many factors. It can come from inside of the company, supporting companies, indirectly related, or totally unrelated. The externalities can be related or not in terms of business deals, inancially, or economically. It is often the case that the causing factors mostly come from the changing situation and condition in politics, social, environmentalists, International Journal of Business Studies Vol 2 No 1 ( February 2018)
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