Analyzing The Determinants and Stability of Non-Performing Loans at Indonesian Private Commercial Banks

Masfar Gazali


This study examines the determinants and stability of Non Performing Loans at private commercial banks in Indonesia during 2003-2021. The determinants of NPL included are both internal and external factors. The internal factors are credit growth and lending rate while the external factors are production index as proxy for GDP, exchange rate and inflation rate. Stability test is added to the analysis. This study defines stability of NPL function as the stability in regression coefficient and the stability in the intercept over time. Taking aggregate monthly NPLs at private commercial banks in Indonesia from 2003 to 2021 this study finds that loan growth has a negative impact while lending rate has a positive impact on NPL. Regarding to external or economic variables, exchange rate and inflation show a negative effect on NPL while Index production has no effect on NPL. Regarding the stability test, this study finds that the regression equation on NPL show a structural change over time. The intercept also differs over years during the study period.


Non performing loans, private commercial banks, external factors, internal factors, stability test,

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