The Effect of Inflation, Interest Rates, and Return on Equity (ROE) on Stock Price Growth in the Basic Chemical Industry on the IDX in 2021-2024

Aminul Amin

doi:10.55927/eajmr.v5i1.539

Authors

Aminul Amin Malangkucecwara College of Economics

DOI:

https://doi.org/10.55927/eajmr.v5i1.539

Keywords:

Financial Inclusion, Lifestyle , Financial Management

Abstract

This study analyzes the influence of three macroeconomic variables and company fundamentals, namely Inflation , Interest Rates , and ROE (Return on Equity) — on Stock Price Growth (Y) using a path analysis approach. The results of the analysis show that ROE has a positive and statistically significant influence on stock price growth , with a path coefficient of 0.268 and a p-value <0.001. In contrast, Inflation and Interest Rates do not show a statistically significant influence , although the direction of their relationship numerically follows economic theory (positive for inflation, negative for interest rates). This finding confirms that in the context of the model and data used, company profitability (ROE) is the most dominant and reliable factor in predicting stock price movements , while macroeconomic variables such as inflation and interest rates are not strong enough to be the main predictors.

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