Financial Sector Stock Index on the Indonesia Stock Exchange Evidence from Interest Rates, Inflation, and Exchange Rates

Sudirman; Amiruddin; Darmawati

doi:10.63922/ijebir.v5i04.4084

Sudirman Institut Bisnis dan Keuangan Nitro, Makassar, Indonesia
Amiruddin Univesitas Hasanuddin, Makassar, Indonesia
Darmawati Univesitas Hasanuddin, Makassar, Indonesia

DOI: https://doi.org/10.63922/ijebir.v5i04.4084

Keywords: capital market, financial sector stock index, inflation, interest rate, and currency exchange rate.

Abstract

This study examines the role of exchange rates, inflation, and interest rates in explaining movements in the Financial Sector Stock Index on the Indonesia Stock Exchange during 2022–2024. The study is quantitative in nature and utilizes secondary data from the Central Bureau of Statistics, Bank Indonesia, and the Indonesia Stock Exchange. The research sample consisted of 36 data points per month, analyzed using multiple linear regression with IBM SPSS Statistics 27. The findings reveal that exchange rates, inflation, and interest rates exert a negative and statistically significant influence on the Financial Sector Stock Index. These three factors have a big effect on the Financial Sector Stock Index all at once. The adjusted R-squared value of 0.765 implies that currency exchange rates, inflation and interest rates explain 76.5% of the variation in the movement of the financial sector stock index. This result implies that macroeconomic stability is an important factor to be considered in maintaining the performance of Indonesia’s capital markets and financial sector.

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