Determinants of Non-Performing Loans and Non-Performing Financing level: Evidence in Indonesia 2008-2021 (original) (raw)
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Abstract: This study analyzes the macroeconomic and fundamentals of Islamic banking factors towards the non-performing financing (NPF) of Bank Muamalat Indonesia in the long run and short-run period 2005-2018. The data used in this study are quarterly time-series data of Bank Muamalat Indonesia Financial Report as the source of fundamentals of Islamic banking data and Bank Indonesia Monetary Policy Review as the source of macroeconomic data period 2005 - 2018. The analytical method used is the Error Correction Model (ECM). This study shows that in the long run, inflation, central bank (Bank Indonesia/BI) Rate, and capital adequacy ratio (CAR) significantly affect the NPF; meanwhile, the financing to deposit (FDR) ratio does not affect NPF. In the short term context, only CAR has a significant effect, yet inflation, BI Rate, and FDR have no significant impact on NPF. Thus, the novelty can present the result of analysis of factors that affect NPF in the long run and short run. The lim...
BAREKENG: Jurnal Ilmu Matematika dan Terapan
Non-performing Loan (NPL) is an indicator that is generally used to determine the ability of bank management to manage non-performing loans. This study aims to analyze the impact of bank-specific factors on NPL. The bank-specific factors are Capital Adequacy Ratio (CAR), Return on Assets (ROA), Operating Expenses on Operating Income (BOPO), and Loan to Deposit Ratio (LDR). The data used is monthly time series data, a case study on Commercial Banks in Indonesia from January 2015 to August 2020. The model used to analyze these problems is Autoregressive Distributed Lag (ARDL). The results obtained are ARDL(1,6,0,1,1) model is the best model. The model shows that bank-specific factors have a direct impact on NPL. Specifically, the ARDL bounds test offers the analysis results, which show that the ability of bank-specific factors to explain the NPL of commercial banks in Indonesia is 84%. At the same time, 16% are other factors outside the model. The analysis results show a long-run coin...
Determinants Of Non-Performing Loans In Indonesia
Media Trend
Non-performing loans (NPLs) are a typical sign of stress testing from financial institutions and may be used to measure the financial system's health. The critical criterion for achieving financial system stability is macroeconomic stability. Instability in the financial system (financial crisis) impairs a bank's liquidity and might lead to more problematic loans, impacting other industries. The association between NPL and numerous macroeconomic variables, including Interest Rate Spreads, Inflation, Percentage of Open Disruption, and Amount of Foreign Exchange Reserves in Indonesia, is examined in this paper. The study used the Vector Error Correction Model (VECM) method to estimate data for a sample period of 2000 to 2020. In the long run, inflation factors, the number of open jobless, and the number of foreign exchange reserves all substantially impacted the ratio of non-performing loans, according to the findings. However, no variables influenced the percentage of non-per...
SENTRALISASI
This study aims to measure the effectiveness of internal factor proxies from the aspect of efficiency as measured by the ratio of operating costs and operating income (BOPO), liquidity as measured by the loan-deposit ratio (LDR), bank size as measured by total assets, and aspects of bank capital that measured by the capital buffer and external factors using the Repo Rate, and inflation on non-performing loans in the ten largest banking industries in Indonesia. The sample consists of the 10 largest banks in Indonesia with the criteria of having total bank assets of the total national banking assets above 2%. The data used are annual data from 2011 to 2020. The results show that from the bank's internal factors, BOPO has a positive and significant effect on the NPL. LDR, and variable capital buffer, a negative and significant on NPL. While the size of the bank obtained results that are not significant to the NPL. From external factors, the results obtained where interest rates hav...
Dynamic non Performing Loan in Indonesia (Empirical Study on Commercial and Islamic Banks)
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This paper discusses non-performing loans in Islamic and commercial banking. This study tries to test internal and external factors such as CAR (capital adequacy ratio), interest rate, ROE (return on equity), inflation rate, and GDP (gross domestic productÂ) against non-performing loans or NPL in Indonesia banking. It would also like to see the impact of the crisis that occurred during the period 2015 to 2020. A sample from this study consisted of 66 Banks. Results showed that of the four variables tested showed a significant influence on the NPL of commercial and Islamic banks, except on the testing of inflation and CAR variables on commercial banks that showed results did not affect the NPL.
Determinants of non-performing loans in Regional Development Banks (BPD) in Indonesia
International Journal of Research in Business and Social Science (2147- 4478)
The country's macroeconomic conditions, whether directly and indirectly will influence the development of the financial and banking sector. This study aims to determine the effect of macroeconomic and internal company variables consisting of BOPO, ROA, money supply, and the unemployment rate on non-performing loans (NPL) in Indonesian banking, especially Regional Development Banks (BPD). The sampling technique used is purposive sampling technique. There are 20 Regional Development Banks (BPD) that met the requirements determined by the observation period from 2008-2021. The data processing method used is panel data regression. Model selection uses the Chow test, Hausman test and Langgrange Multiplier test (LM Test). Based on this, the appropriate model is the Fixed Effect Model (FEM). Testing the classical assumptions of FEM shows that there is a heteroscedasticity problem, then it is recovered using the Feasible Generalized Least Square (FGLS). The results of the analysis show ...
Non-Performing Loans Sensitivity to Macro Variables: Panel Evidence from Malaysian Commercial Banks
American Journal of Economics, 2013
Credit risk is one of the most important kinds of risk in banking sector. The relationship between business cycle and banks' loan losses was one of the hot debates in recent economic literature especially with respect to financial stability analysis. The quality of loans can be one of the factors that limit the banks' loan supply and affect on investment spending. Although banks have a significant role in transmission of monetary policy; in the meantime their performance is strongly influenced by monetary and fiscal policies that are effective in recession and prosperity and thereby affect bank performance; in other words, macroeconomic variab les can effect in/directly on banks loans quality and their transitional role. Thus policy makers and bankers are always concerned with the financial stability and are always looking for tools to better manage banks' credit risk. One of the risk indicators that are used in literature of banks' credit risk is Non-Performing Loans (NPL). Hence the main objective of this study is to analyze relat ionship between banks loans quality and macroeconomic variab les by using a dynamic panel data model on Malaysian co mmercial banking system for the 1997-2012 periods. The results show that there is a strong evidence of cyclical sensitivity of loan quality in Malaysia's commercial banking system. Based on the results lending interest rate and FDI-net outflow (% GDP) are the most effective factors on NPL ratio with simu ltaneous positive effects and a reverse effect with one-year delay. It can be said that the impact of external shocks on the domestic banking system is more than internal shocks. The result of this study can be helpful to bank supervisory and economists to adjust banking system stability and economic policies.
Zenodo (CERN European Organization for Nuclear Research), 2022
This research intends to analyze the macroeconomic factors affecting Non-Performing Loans (NPL) of multinational banking in Indonesia using the approach of quantitative to-causality. The population consists of 68 private commercial bank companies in Indonesia which are owned by foreign parties and private parties as well as Indonesian citizens (multinational ownership). The research sample is 19 companies with the criteria of private commercial banks in Indonesia which are owned by foreign parties and private parties as well as Indonesian citizens (multinational ownership) listed on the Indonesian Stock Exchange from 2013-2021 accompanied by foreign parties as the majority shareholder. Sample screening by purposive methods. The research data were obtained through secondary data from published websites on the Indonesia Stock Exchange, Bank Indonesia, Ministry of Trade, Globalrates, Macrotrends, and Central Statistics Agency. Then analyzed using the panel data regression analysis method. The results found that international interest rates have a positive effect on NPL of multinational banking in Indonesia, but inflation and crude oil prices have a negative effect on NPL of multinational banking in Indonesia, while exchange rates and exports have no effect on NPL of multinational banking in Indonesia.
2018
Non performing loan (NPL) is the risk of bank credit . Banks in Indonesia have NPL higher than other countries in ASEAN. So, it is important to know factors influencing NPL. This Research aims to examine and to analyze macro and bank factor to NPL bank in Indonesia 2011-2015. Statistic tehnique used in this research is Multiple Regression test. The result is simultaneously CAR, Listed, BOPO, LAR, Bi Rate, Exchange Rate, LDR, and ROE positive significant influence to NPL. Based on t test, the result is BOPO, Listed, LAR and LDR significant influence to NPL, while CAR, Bi Rate, Exchange Rate, and ROE no significant influence to NPL. This research expected that it can be useful for management bank to manage NPL. Bank is expected to select the lending of credit the society.
International Journal of Academic Research in Economics and Management Sciences, 2022
Although loans are a profitable product for banks, they inherently contain an element of risk. The financial sector in terms of the fact that a loan transferred to the economy is not paid in due time and becomes problematic, firstly affecting the bank that made the loan and then other banks. On the other hand, it affects the real sector in terms of reducing the amount of loan to be transferred to the economy and increasing the cost of loan. In other words, the existence and control of non-performing loans is very important for the activities of both the banking sector and the real sector. In this study, the relations between the amount of nonperforming loans, real effective exchange rate, inflation rate, economic growth and interest rates were analyzed by ARDL analysis method. It covers the periods from 2003; Q1 to 2020; Q4. As a result, it has been determined that other variables other than the inflation rate affect non-performing loans.