The Role of Asset Quality and Macroeconomic Variables in Driving Financial Performance of Sharia Healthcare Firms Indonesia

Abstract

This study aims to analyse the influence of internal and external variables on the financial performance and stock prices of health sector companies listed in the Indonesian Sharia Stock Index (ISSI). The internal variables studied include company size (Size), asset quality (Asset Quality), and asset management (Asset Management), while external variables include inflation and Gross Domestic Product (GDP) growth. Financial performance is measured using Return on Assets (ROA) and Return on Equity (ROE). This study uses a quantitative approach with panel data analysis to evaluate the company's performance trends in a certain period of time. The results show that asset management and company size have a positive influence on ROA, while financial risk has a significant negative influence. However, external variables such as inflation and GDP do not have a significant influence on ROA, ROE, or stock prices. This research makes important contributions in various dimensions, both academically, practically, and policy. Academically, this study fills a literature gap related to the financial performance of sharia-based companies, especially in the health sector listed in the Indonesian Sharia Stock Index (ISSI). The focus on the relationship between internal variables such as firm size, asset quality, and asset management with external variables such as inflation and GDP provides a holistic perspective that has rarely been discussed in previous research. The study expands the discussion on how sharia principles affect financial decision-making, particularly in risk management and corporate profitability. Practically, the results of this study provide valuable insights for company management in improving financial performance. The emphasis on the importance of effective asset management and financial risk control offers strategies that can increase profitability while maintaining the financial stability of the company. For investors, this study provides guidance in evaluating sharia-based companies by highlighting factors such as asset quality and risk management, thus helping to make more informed investment decisions. In terms of policy, this study offers an empirical basis that can be used by regulators to design policies that support the stability of the sharia-based health sector. The results of this study can help steer regulations that strengthen financial risk management, increase transparency, and create incentives for companies that adhere to sharia principles. Thus, this research not only provides academic contributions but also high practical and policy relevance, especially in supporting the development of the sharia-based health sector in developing countries such as Indonesia. This implication underscores the importance of balancing profitability, adherence to Islamic ethics, and financial sustainability in creating added value for all stakeholders. The study is of significant novelty value because it combines in-depth analysis of financial performance with a sharia-based approach in the health sector, an area that has not been widely explored in the previous literature. The focus on companies listed on the Indonesian Sharia Stock Index (ISSI) offers a unique context, where companies are not only faced with conventional business challenges but also have to comply with sharia principles such as the prohibition against riba, gharar, and maysir. This aspect adds complexity and unique ethics in financial management that have not been widely researched. Another value of this study lies in its holistic approach, which integrates the company's internal variables (such as size, asset quality, and asset management) with macroeconomic external variables (inflation and GDP). This analysis allows for a deeper understanding of how internal and external factors interact in influencing financial performance and stock prices, particularly in the sharia-based healthcare sector.