How financial ratios drive return on equity? A case study of Bank Syariah Indonesia
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Cut Deby Laurancya
Irma Liani
Rahmayati
Murni
This study aims to examine the influence of liquidity ratios, solvency ratios, and activity ratios on return on equity (ROE) in Bank Syariah Indonesia during the 2019–2023 period. The research employs a purposive sampling technique, selecting Islamic commercial banks that meet specific criteria: not delisted during the 2019–2023 period, maintaining positive financial reports, and publishing complete financial statements throughout the study period. Multiple linear regression analysis is utilized, along with hypothesis testing using t-statistics to assess partial regression coefficients and F-statistics for simultaneous regression coefficients. Classical assumption tests are also conducted to ensure data validity. The findings reveal that all variables pass the classical assumption tests, confirming their suitability for analysis. The t-test results show that the liquidity ratio has a significant positive effect on ROE, the solvency ratio has a significant negative effect on ROE, and the activity ratio has a significant positive effect on ROE. Furthermore, the F-test indicates that liquidity, solvency, and activity ratios collectively have a significant effect on ROE. These findings provide valuable insights for investors seeking financial report information to guide investment decisions.