Record Detail

Perbanas Finance & Banking Journal, Vol. 6, No. 2, Desember 2004; 131–144

Link download : http://www.perbanas.id/jurnal/index.php/jkp/article/view/39/61
:Link : http://www.perbanas.id/jurnal/index.php/jkp/article/view/36

Abstract
Price Book Value (PBV) on Banking Industry in Indonesia tends to change from time to time under uncertatinty conditions. Many factors can influence that changes. However, theoritically, there are two main factors which influence significantly toward PBV, namely return on equity (ROE) and earning growth rate (EGR). For that reason, this research will explore the influence of ROE and EGR toward PBV both partially and integrally. By exploring 20 companies on banking industry, in terms of those variables, which are listed in Jakarta Stock Echance as a sample, it can be concluded that partially, 57,4% of the changes of the PBV can be described by ROE as a primary and positif factor and 12,0% by EGR as a negatif factor. Furthermore, integrally, 41,3% can be influenced by those both factors. It is suggested that the companies should improve its ROE and reduce its EGR by increasing their net profit through offering good management and reducing costs of operation.
Keywords: return on equity (ROE), earning growth rate, price-to-book value (PBV) and banking equity valuation.