THE IMPACT OF RETURN ON EQUITY (ROE) ON BANKING STOCK PRICES BEFORE, DURING, AND AFTER THE COVID-19 PANDEMIC

Abstrak

This study investigates the impact of Return on Equity (ROE) on banking stock prices in Indonesia across three distinct periods: before (2019), during (2020), and after (2022) the COVID-19 pandemic. Employing a quantitative approach with time series analysis, we examine data from 29 banks listed on the Indonesia Stock Exchange using Ordinary Least Squares regression. Our findings reveal a significant positive relationship between ROE and stock prices in 2019 and 2022, with adjusted R-squared values of 54.4% and 26.2%, respectively. However, during the pandemic in 2020, ROE showed no significant effect on stock prices, likely due to heightened market uncertainty and risk aversion. The study demonstrates that while ROE is a crucial indicator for investors during periods of economic stability, external factors may overshadow its influence during times of crisis. These results provide valuable insights for investors, regulators, and bank managers navigating the post-pandemic financial landscape, highlighting the changing dynamics of bank valuation and the relevance of traditional financial metrics in varying economic conditions.