Digital Finance and Bank Stock Valuation: The Role of Cryptocurrency and Profitability in Indonesian KBMI 3 and KBMI 4 Banks
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This study aims to examine the effect of cryptocurrency and profitability on stock prices of KBMI 3 and KBMI 4 banks listed on the Indonesia Stock Exchange during the 2021–2023 period. This research employs a quantitative explanatory approach using secondary data obtained from annual reports of listed banks, stock market data, and cryptocurrency market data. The sample consists of ten KBMI 3 and KBMI 4 banks selected through purposive sampling, resulting in 60 observations. Data were analyzed using multiple linear regression supported by descriptive statistics and classical assumption tests. The findings reveal that cryptocurrency does not have a significant effect on stock prices, indicating that fluctuations in digital asset markets have not yet become a primary determinant of banking stock valuation in Indonesia. In contrast, profitability has a positive and significant effect on stock prices, suggesting that investors continue to rely heavily on firms' financial performance as the main basis for investment decisions. Furthermore, cryptocurrency and profitability jointly have a significant influence on stock prices, demonstrating that both external market dynamics and internal corporate performance contribute to stock price formation. These findings reinforce Signaling Theory by emphasizing the importance of profitability as a positive signal to investors while extending Arbitrage Pricing Theory by illustrating that the influence of cryptocurrency is context-dependent and varies across industries. This study contributes to the growing literature on digital finance by providing empirical evidence from the Indonesian banking sector and offers practical insights for investors, banking management, and regulators in responding to financial digitalization and the evolving cryptocurrency ecosystem.
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