Analysis of Bank-Specific Variables Viewed by Investors: The Impact of Intellectual Capital, Good Corporate Governance, Liquidity, and Solvency on the Value of Banking Firms in Indonesia

Abstract

Bank-specific attributes may enhance profitability while conveying risks that reduce market valuation. Prior studies offer inconclusive findings and rarely examine net interest margin (NIM) as the mechanism linking intellectual capital (IC), good corporate governance (GCG), the loan-to-deposit ratio (LDR), and the capital adequacy ratio (CAR) to bank value. This study investigates their direct and NIM-mediated effects on price-to-book value (PBV). The sample comprises 26 Indonesian listed banks observed during 2018-2025, yielding 208 balanced panel observations. Both equations were estimated using random-effects Panel EGLS with White period robust covariance; indirect effects were evaluated using the robust Goodman test. IC and LDR positively affect NIM, whereas GCG and CAR do not. GCG and NIM positively affect PBV; IC and CAR are insignificant. LDR has a significant negative direct relationship with PBV, contrary to the hypothesized direction. NIM mediates only the LDR-PBV relationship: its positive indirect effect opposes the negative direct effect. The study's novelty is identifying this competitive mediation, showing that lending intensity improves valuation through interest-margin performance while investors simultaneously discount liquidity and credit risks.