INTEREST RATES AND INVESTOR RETURNS: A STUDY OF DYNAMICS IN ISLAMIC BANKING

Abstract

This study aims to evaluate the effect of interest rates on stock returns for investors in Islamic banking in Indonesia. The study employs a descriptive quantitative method and utilizes simple regression analysis to evaluate the impact of interest rates on investor stock returns. The findings indicate that fluctuations in interest rates do not affect the stock returns of investors in Islamic banking in Indonesia. This can be attributed to the fact that Islamic banks operate under a profit-sharing system rather than an interest-based system. Furthermore, Indonesia's predominantly Muslim population places significant importance on Sharia compliance, which serves as a primary consideration for investors in Islamic banking. This indicates that interest rates do not influence investors interest in investing in Islamic banks.