The Influence of Profitability, Monetary Policy on Investment Decisions of Manufacturing Companies in Indonesia

Rahmat Hidayat, Edisah Putra Nainggolan

Abstract


This research aims to examine the influence of profitability and monetary policy on investment decisions in manufacturing companies in Indonesia. The population in this study were manufacturing companies listed on the Indonesian stock exchange with a sample of 12 companies selected using the purposive sampling method. Data were analyzed using multiple linear regression analysis. The research results conclude that company profitability, which is measured through indicators such as Return on Assets (ROA) and Return on Equity (ROI), has a positive influence on investment decisions. Companies with high profitability tend to be better able to allocate resources into new investments or expansion, which in turn can increase their production capacity and operational efficiency. Furthermore, monetary policy implemented by Bank Indonesia plays an important role in shaping the investment climate. A decrease in the benchmark interest rate tends to encourage companies to make more investments by making borrowing costs more affordable. On the other hand, less conducive policies such as increasing interest rates can discourage investment by making capital costs higher and reducing net profits from investment.

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DOI: https://doi.org/10.30596/miceb.v2i0.846

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