摘要：The return and risk of investing in stocks is very important for investors in considering an investment. The purpose of this study was to determine the significance of the effect of credit risk and interst rate risk on profitability and returns of banking stocks. These samples included 27 banks which were determined using purposive sampling method. Data were obtained from published financial reports of banks in 2012-2016. The analytical tool used in this research is path analysis and Sobel test. The results shows that credit risk has positive and significant effect on stock returns and had a significant negative effect on profitability, the risk of interest rates negatively affecting stock returns and insignificant negative effects on profitability, profitability had a significant positive effect on stock returns. Sobel test in this study showed that the profitability variable capable of mediating the credit risk on stock returns.This research can be used as information for investors in determining investment decisions by considering the risks contained in the investment to be made. For banking management, the results of this study can be used as a consideration to review the bank's performance in risk management which can affect returns by taking into account credit risk, interest rate risk, and profitability.
