THE EFFECT OF LDR AND CAR ON THE FIRM VALUE OF CONVENTIONAL BANKS 2020-2025

Eni Yulistyani, Anny Widiasmara, Juli Muwarni

Abstract


This empirical investigation evaluates the impact of the Loan to Deposit Ratio and Capital Adequacy Ratio on firm value among conventional commercial banks listed on the BEI across the 2020–2025 observation window. A quantitative methodology was implemented, utilizing secondary financial information retrieved from annual corporate disclosures. Employing a purposive sampling approach, 43 banking entities were identified, yielding 258 total observational data points. Data processing was conducted via Multiple Linear Regression utilizing IBM SPSS Statistics 26. Empirical results indicate that the Loan to Deposit Ratio does not significantly affect firm value, suggesting that credit allocation levels are not the primary metric evaluated by equity investors. Conversely, the Capital Adequacy Ratio exerts a positive and statistically significant effect on firm valuation, demonstrating that enhanced capital resilience reinforces market confidence and elevates corporate worth. Simultaneously, the Loan to Deposit Ratio and Capital Adequacy Ratio jointly influence firm value.

Keywords: Loan to Deposit Ratio, Capital Adequacy Ratio, Firm Value


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References


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