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The firm value of Himbara Banks, proxied by Price to Book Value (PBV), has shown a declining trend despite a rising Capital Adequacy Ratio (CAR). This study aims to examine the effect of CAR and Non-Performing Loan (NPL) on the firm value (PBV) of Himbara Banks (BBNI, BBRI, BBTN, BMRI) for the 2016–2025 period. A quantitative approach using panel data regression was employed, with the Fixed Effect Model (FEM) selected through the Chow Test and Hausman Test, and heteroscedasticity corrected via Panel EGLS Cross-section SUR. The sample consists of all four Himbara Banks, yielding 40 balanced panel observations. The results show that: (1) CAR has a negative and significant effect on PBV (coefficient −4.503; prob. 0.000), indicating that excess capital is perceived by the market as unproductive idle capital; (2) NPL has a negative and significant effect on PBV (coefficient −13.768; prob. 0.000), consistent with Agency Theory; and (3) CAR and NPL jointly and significantly influence PBV, with an Adjusted R² of 96.87%. These findings imply that optimizing capital productivity and strengthening credit risk management are key strategies for enhancing the firm value of state-owned banks in Indonesia.
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Agusman et al. (2026) studied this question.
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