THE DETERMINANTS OF NON PERFORMING FINANCING OF ISLAMIC BANK IN INDONESIA PERIODE 2012-2017

Abstract

Non-performing financing (NPF) is the financial ratio that point out the problem financing of Islamic Banks in Indonesia. NPF can be influenced by several internal and external factors. In this research the internal factors used are as follow: Capital Adequacy Ratio (CAR), Return on Assets (ROA), Debt to Assets Ratio (DAR), Bank Size (BS), Debt to Equity Ratio (DER) and Assets Turnover (ATO). While the external factors used in this research is Inflation Rate. This research is quantitative method and the secondary data which is obtained from annual reports of each banks for 6 years in quarterly based. The panel data with 192 observations is used and the results of the panel least squares as follow: CAR has a negative significant influence towards NPF, while other variables: ROA, DAR and Inflation Rate have a positive influence toward NPF. On the other hands BS, DER and ATO are not significant. The most significant variable is Inflation Rate. All of the independent variables influence simultaneously significant toward NPF.