The Effect of Economic Growth, Inflation Rate, and Interest Rates of Bank Indonesia on the Composite Stock Price Index on the Indonesia Stock Exchange for the 2015-2019 Period

Abstract

Generally, investors use the Composite Stock Price Index (IHSG) as a parameter of stock performance listed on the Indonesian stock exchange. One of the factors that can affect the IHSG is macroeconomic factors such as economic growth, inflation, and interest rates. This study aims to determine the effect of economic growth, inflation rate, and interest rates of Bank Indonesia on the IHSG. The population and sample in this study are quarterly economic growth, inflation, Bank Indonesia interest rates, the monthly Composite Stock Price Index (IHSG) from 2015-2019. Testing the hypothesis of this study using validity and reliability tests with the SmartPLS version 3 application. The results showed that the variables of economic growth and inflation had no significant effect on the Composite Stock Price Index (IHSG). Meanwhile, the interest rate variable of Bank Indonesia has a significant effect on the IHSG.

Composite Stock Price Index during Covid-19 Pandemic at the Indonesian Stock Exchange

“…Therefore, this phenomenon is the ultimate perfect storm. [4]. What is meant by the ultimate perfect storm is the fall in stock prices and Covid-19 outbreak.…”

“…. [8][10] Meanwhile, that the decline in inflation that occurs will actually cause economic growth in Indonesia to slow down [4]. This situation will reduce investors' interest to invest in the capital market.…”