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Unveiling the Influence of Risk on Banking Firm Valuation

In: Proceedings of the Thirteenth International Conference on Entrepreneurship and Business Management UNTAR 2024 (ICEBM 2024)

Author

Listed:
  • Nurainun Bangun

    (Tarumanagara University, Faculty of Economics and Business)

  • Khairina Natsir

    (Tarumanagara University, Faculty of Economics and Business)

Abstract

Banking risk assessment is essential to maintaining financial stability, complying with regulations, and preventing bad debts. Effective risk management helps banks maintain customer and investor trust, avoid bankruptcy, and maintain profitability. Well-managed risks also allow banks to diversify their portfolios and optimize capital allocation, ensuring long-term operational sustainability. This study intends to assess the influence of business risk, market risk, and credit risk on the value of banking firms over the 2018-2023 period. The research focuses on commercial banking institutions listed on the Indonesia Stock Exchange during this timeframe. This quantitative study relies on secondary data and selects samples through purposive sampling, resulting in 37 banking firms. The analysis involves classical assumption testing and multiple regression analysis. Findings indicate that market risk, credit risk, and business risk have a negative and statistically significant impact on the company value of banks listed on the Indonesia Stock Exchange during the specified period.

Suggested Citation

  • Nurainun Bangun & Khairina Natsir, 2025. "Unveiling the Influence of Risk on Banking Firm Valuation," Advances in Economics, Business and Management Research, in: Keni Keni & Teoh Ai Ping & Linda Lin-Chin Lin (ed.), Proceedings of the Thirteenth International Conference on Entrepreneurship and Business Management UNTAR 2024 (ICEBM 2024), pages 93-105, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-809-7_8
    DOI: 10.2991/978-94-6463-809-7_8
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