Risk Profile Governance Earnings And Capital Predict Banking Corporate Value
Abstract
General Background The banking sector functions as a vital financial intermediary necessitating robust operational performance to maintain public trust and stimulate macroeconomic growth. Specific Background Regulatory frameworks require financial institutions to maintain their health using risk, administration, profitability, and equity metrics to secure market confidence and mitigate potential liquidity crises. Knowledge Gap Previous empirical literature presents fragmented findings, frequently isolating individual bank health indicators rather than evaluating the comprehensive assessment framework against market valuation metrics like Tobin's Q. Aims This study investigates how risk profile, corporate governance, earnings, and capital determine the firm value of banking enterprises listed on the Indonesia Stock Exchange from 2020 to 2025. Results Based on multiple linear regression analysis of 217 purposively sampled observations, the findings demonstrate that non-performing loans, independent commissioner proportions, return on assets, and capital adequacy ratios significantly dictate corporate market assessment. Novelty This research provides a holistic evaluation of the updated bank health assessment framework by simultaneously testing its four core components against equity market valuation across a dynamic five-year timeline. Implications Financial institutions must prioritize comprehensive hazard mitigation, transparent administrative oversight, robust profitability, and sufficient equity reserves to optimize investor confidence and maximize long-term market capitalization. Highlights: Non-performing loan metrics inversely correlate with market capitalization among financial institutions. Independent commissioner proportions actively stimulate investor confidence and market assessment. Return on assets and adequacy ratios directly secure long-term equity appreciation. Keywords: Tobin's Q, Market Capitalization, Bank Health, Non-Performing Loans, Financial Intermediaries