Title:
THE INFLUENCE OF INFLATION, EXCHANGE RATE, AND INTEREST RATE ON FINANCIAL DISTRESS WITH FIRM SIZE AS A MODERATING VARIABLE IN MANUFACTURING COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE

Authors:
Cut Shofira Maretti Harnold, Muhammad Adam and A. Sakir, Indonesia

Abstract:
This study aims to prove the effect of inflation, exchange rate, and interest rate on financial distress with firm size as a moderating variable in manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2020-2024 period. The sample consisted of 124 manufacturing companies selected through purposive sampling, resulting in 620 observations. Data analysis was performed using panel data regression with the Fixed Effect Model approach based on the results of the Chow and Hausman Tests. Hypothesis testing was conducted through simultaneous tests, partial tests, and Moderated Regression Analysis (MRA). The analysis results show that the exchange rate affects financial distress significantly, while inflation and interest rates have no significant effect. Firm size is proven to moderate the exchange rate effect on financial distress significantly but fails to moderate the effects of inflation and interest rates. These findings imply that companies need to manage exchange rate risk more effectively, and small firms should be more vigilant about exchange rate fluctuations as they do not possess the same financial resilience as large firms.