Factors affecting the non-performing loans in Indonesia

Abstract

The purpose of this study is to analyze the factors influencing non-performing loans in companies listed on the Indonesian Stock Exchange Banking sector.All banks in Indonesia carefully review their Non-Performing Loans.According to the Central Bank regulations, the non-performing loan is at a maximum of 5%.Exceed the percentage; there will be one of the indications that the bank is experiencing difficulties and could potentially endanger business continuity.The researchers use the micro-economic and several macro-economic variables to predict the influencing factors toward the non-performing loan.Microeconomic variables studied are the ratio of bank capital to assets (CAP), the loans to deposits (LTD) ratio, the return to assets (ROA) ratio and the ratio of return to equity (ROE).Macroeconomic variables are the ratio of public sector debt to gross domestic product (DEBT), the surplus or deficit of the government budget to gross domestic product (FISCAL) ratio, the percentage increase in gross domestic product (GDP), annual inflation rate (INFL), and percentage of job seeker level (UNEMP).Researchers used some regression methods to analyze the results and the samples taken by researchers were companies listed in the banking sector during the period 2014-2017, and macroeconomic data in Indonesia during that year.

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