FACTORS AFFECTING NON-PERFORMING LOAN IN INDONESIAN BANKING INDUSTRY

Abstract

The banking industry has an important role for the community both as savings and as loans in the form of credit to the public, because by providing credit to the public, banks can experience Non-Performing Loans. Therefore, the purpose of this study is to see and empirically prove the effect of CAR, LDR, NIM, and DER on Non-Performing Loans. The researcher used purposive sampling method and panel data where data was collected from the official websites of each bank and OJK. This study contains 120 observational data from five banks in 2014 - 2019 and uses quarterly data. This research is a quantitative study with a random effect model and the data has been tested for normality, autocorrelation, multicollinearity, and heteroscedasticity. Empirical evidence from this study shows that CAR does not have a significant effect on NPL, but LDR, NIM, and DER have a significant effect on NPL. The results of this study indicate that the independent variables that affect the dependent variable are 58.56%.