The Relationship of Inflation, Interest Rates, and Investment Risk with Financial Performance
Year: 2024
Type: article
Abstract: A company's financial performance is affected by a variety of macroeconomic factors, including inflation, interest rates, and investment risks. High inflation can reduce consumer purchasing power and affect corporate revenue. Fluctuating interest rates can affect borrowing and investment costs. Investment risk also plays an important role in determining a company's investment success and financial stability. This study aims to analyze the relationship between inflation, interest rates, and investment risks with the company's financial performance. By understanding these relationships, companies can develop better strategies for managing their financial performance in the face of macroeconomic changes. This study uses a quantitative approach with multiple regression analysis methods to test the relationship between these variables. The data used in this study comes from the financial statements of companies listed on the Bursa Efek Indonesia (BEI) during the period 2015-2020. The dependent variable in this study is financial performance, while the independent variables are inflation, interest rates, and investment risk. The results show that inflation has a negative and significant relationship with the financial performance of companies, while interest rates have a negative but insignificant relationship. Investment risk has a negative and significant relationship with financial performance. These findings indicate that high inflation and investment risk can negatively impact a company's financial performance, while interest rates do not have a significant effect.
Author: Putri Marino Firandra
Institution: Mercu Buana University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4409876053