Profitability, Leverage, and Dividend Policy: Determinants of Stock Return Levels of Indonesian Banks

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Quantitative analysis reveals profitability and leverage boost stock returns in banks, indicating dividend policy’s influence as a mediator.

Stock returns are positively influenced by profitability and leverage, indicating significant financial health for investors.
The study observes 16 Indonesian banks over the periods 2016–2019 and 2022–2023, with a total of 96 observations.
Path analysis reveals dividend policy significantly mediates the relationship between profitability, leverage, and stock returns.
The findings may suggest a preference for retained earnings over cash dividends among investors in the banking sector.

Safitri et al. (2025) studied this question.

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Quantitative analysis reveals profitability and leverage boost stock returns in banks, indicating dividend policy’s influence as a mediator.