The The Effect of Financial Performance on the Stock Prices of Sharia Banks on the Indonesia Stock Exchange

Abstract

This study aims to analyze the effects of Return on Equity (ROE), Financing to Deposit Ratio (FDR), and Capital Adequacy Ratio (CAR) on the stock prices of Islamic banks listed on the Indonesia Stock Exchange (IDX). The study is motivated by the mismatch between the growth of the Islamic banking industry and the movement of Islamic banking issuers’ stock prices during the economic recovery period. Total Islamic banking assets increased by 45.03% from the end of 2021 to September 2025, yet three of the four Islamic banks in the sample experienced declines in stock prices. The study employs a quantitative approach using quarterly panel data for the 2021–2025 period covering Bank Syariah Indonesia, Bank Aladin Syariah, Bank Panin Dubai Syariah, and Bank BTPN Syariah. The sample consists of 76 observations. Secondary data were obtained from quarterly financial reports and stock closing-price data. The analysis was conducted using EViews, with model selection based on the Chow and Hausman tests. The results show that ROE has no significant effect on stock prices, with a probability of 0.3172; FDR has no significant effect, with a probability of 0.7511; while CAR has a significant positive effect, with a probability of 0.0002. Simultaneously, ROE, FDR, and CAR significantly affect stock prices, with an F-statistic of 232.820 and a probability of 0.000. The Adjusted R-squared value of 94.88% indicates that a large proportion of stock-price variation in the model is jointly explained by the three ratios. These findings indicate that capital adequacy is one of the strongest financial information variables in explaining stock prices partially, while market assessment of bank performance remains multidimensional.