Research Journal of Finance and Accounting www.iiste.org ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol.9, No.7, 2018 146 CAMEL Method: Bank Health Levels for Financial Performance of Banking in Indonesia Stock Exchange Period 2006 to 2015 Djoko Hanantijo Perbanas Institute, Jakarta, Indonesia Trie Utami Armayasari Perbanas Institute, Jakarta, Indonesia Harianto Respati University of Merdeka Malang, Indonesia Abstract The Banking, one of the corporate sector in Indonesia, has an important role in promoting the economy system. The effect of it leds to banking companies to keep their financial performance especially for companies that listed on Bursa Efek Indonesia (Indonesian Stock Exchange) through optimalisation on it’s firm value. At the end, it will affect to the soundness of banking company. In this study, CAMEL Method (Capital, Asset, Management, Earning, and Liquidity) is used to measure the value of bank. It consists of Capital Adequacy Ratio (CAR), Non Performing Loan (NPL), Operating Expenses Operating Income (BOPO), Return on Assets (ROA), and Loan to Deposit Ratio (LDR). While, the ratio Price to Book value (PBV) is employed to analyze the financial performance of the company's value. In this study, the methodology used in this study is the analysis of data panel using the Fixed Effect. The results of the CAMEL methods research stated that there is influence of the bank to the Company's performance as measured through the Price to Book Value (PBV). Results of regression estimation of panel data also showed that the Operating Expenses Operating Income (BOPO) and Return on Assets (ROA) affects positive and significant to Price to Book Value (PBV), while the Loan to Deposit Ratio (LDR) has a significant and negative effect on the Price to Book Value (PBV). Keywords : Price to Book Value, CAMEL, CAR, NPL, BOPO, ROA, LDR I. INTRODUCTION Capital Market activity determines the economy in Indonesia. The role or function of the capital market consists of two functions. The first function, the capital market activity on business funding is to offer some funds to some companies where funds are obtained from public funds. The second function, as a means of investment for the community. (Martalena dan Malinda, 2011:3). Investors need accurate and valid information in making investment decisions. One of the investment parameters is the annual corporate financial statements. Companies listed on the Indonesia Stock Exchange (Bursa Effek Indonesia/BEI) each year must report financial performance to the public. The financial statements are an important source of information for internal company and external party (public). Banking as a pool of funds from economic units that are over-funded (surplus funds) and then make channeling to economic units that have a financial deficit. Banking offerings in the form of credit. This channeling function indicates that banks have a major role in the economic system of a country. Chanelling system conducted by banking requires an element of trust from the community. In order for Banking to have a level of public confidence, the banking should focus on the level of financial health. Djabid (2009) explains that the purpose of the company is to increase the corporate value (banking) that is related to increasing the wealth of owners or shareholders. Cheng and Christiawan (2011) explain about financial performance. Thought Cheng and Christiawan (2011) about financial performance is a report of financial decisions reported by the management for the purpose of effectiveness and efficiency of the financial field. The parameters of the corporate to explain the financial performance appear on the corporate's ability to earn a profit. The better the corporate has the ability to earn a profit, then the corporate gets a positive prospect in the future. Banking as a mediation institution between the excess funds and the party lack of funds or require funds. In order for banks to control all activities well then it takes some measure of control. Most banks are more focused on controlling bank health. According to Sinaga (2011), referring to the source of Bank Indonesia Regulation Number 6/10 / PBI / 2004 and Circular Letter Number 6/23 / DPNP / 2004 regarding the health rating of commercial banks, explained that there are several measures that can explain the health of a Bank, namely Capital , Asset quality, Management, Earning and Liquidity called CAMEL. In the period of 2006 to 2015, based on information on the banking listed on the Exchange Effek Indonesia experienced a significant growth rate, but on the other hand the interest rate of bank credit has decreased. The phenomenon of increase and decrease in these two different conditions it is necessary to conduct in-depth brought to you by CORE View metadata, citation and similar papers at core.ac.uk provided by International Institute for Science, Technology and Education (IISTE): E-Journals