What Most Influence on Non-Performing Loan in Indonesia? Bank Accounting Perspective with Mars Analysis

  • Nanang Shonhadji STIE Perbanas Surabaya
Keywords: Non-Performing Loans, credit growth, exchange rates, capital adequacy ratio, MARS

Abstract

The research objective is to examine factors that affect non-performing loans at conventional private banks in Indonesia. These factors include growth in gross domestic product, interest rates, currency exchange rates, exports, credit growth, inflation, return on asset, operating costs to operating income, and the capital adequacy ratio. The sample used in this study was conventional private banks listed on the Indonesia Stock Exchange 2014-2019. Data analysis techniques using Multivariate adaptive regression spline (MARS). The study results inform an influence between the predictor variables and the response variables based on functions in the model. The variables that affect non-performing loans are credit growth, exchange rates, inflation, capital adequacy ratio, return on asset, operating costs to operating income, and interest rates. In contrast, gross domestic product growth and export growth in this study do not affect non-performing loans in conventional private banks. The MARS model has informed that the most influential variable on non-performing loans is credit growth. Banking authorities need to control lending by applying credit risk management and regulating the quality of credit loans to contribute to the results in this study.

References

Ahmad, F., & Bashir, T. (2013). The explanatory power of bank Specific Variables as. Determinants of Non-Performing Loans: Evidence from Pakistan Banking. Sector”. World Applied Sciences Journal: Pakistan, 22(9), 1220-1231.

Akinlo, O. (2014). Determinants of NPL in Nigeria. Accounting and Taxation, 6 (2), 21-28.

Ali, M. (2016). Bank profitability and its determinants in Pakistan: A panel data analysis after a financial crisis. Journal of Finance and Economics, 1(1), 3-16.

Almazari, A. A. (2014). Impact of internal factors on bank profitability: Comparative study between Saudi Arabia and Jordan. Journal of Applied Finance & Banking, 4(1), 125-140.

Ameni Tarchouna, Bilel Jarraya, Abdelfettah Bouri, (2017). How to explain non-performing loans by many corporate governance variables simultaneously? A corporate governance index is built to US commercial banks, Research in International Business and Finance, Volume 42, 645-657. https://doi.org/10.1016/j.ribaf.2017.07.008.

Ari, M. G. (2016). Pengaruh Makroekonomi Terhadap Non Performing Loan Perbankan. Jurnal Ekonomi & Kebijakan Publik, 7(2), 159-170.

Badar, M., & Javid, A. (2013). Impact of Macroeconomic Forces on Nonperforming Loans: An Empirical Study of Commercial Banks in Pakistan. WSEAS Transactions on Business and Economics, 10(1), 40-48.

Barus, A. C., & Erik. (2016). Analysis of Factors Affecting Non-Performing Loans at Commercial Banks in Indonesia. JWEM (Jurnal Wira Ekonomi Mikroskil), 6(2), 113-122.

Bofondi., & Ropele. (2011). Macroeconomic determinants of bad loans: evidence from Italian banks. Questioni di Economia e Finanza, 89(1), 11-41.

Changjun, Z., Probir, K. B., & Niluthpaul, S. (2019). Industry-Specific and Macroeconomic Determinants of Non-Performing Loans: A Comparative Analysis of ARDL and VECM. Sustainability, 20(12), 325-339.

Curak, M., Pepur, S., & Poposki, K. (2013). Determinants of Non-performing Loans Evidence from Southeastern European Banking System. Banks and Bank Systems, 8(1), 45-53.

Dewi, K. P., & Ramantha, I. W. (2015). Effect of Loan Deposit Ratio, SBI Interest Rate, and Bank Size against Non Performing Loan. E-Jurnal Akuntansi Universitas Udayana, 11(3), 909-920.

Diansyah (2016). Influence of Internal and External Factors to Non-Performing Loan (Study on Banks listed on Indonesia Stock Exchange Period 2010-2014). Journal of Business Studies, 2(1), 1-13.

Dimitrova, P. (2013). Some Aspect of The Accounting Analysis of Loan Granted by Commercial Banks. Economic Archive, 66(2), 54-66.

Elmira Partovi & Roman Matousek, (2019) Bank efficiency and non-performing loans: Evidence from Turkey, Research in International Business and Finance, Volume 48, 287-309, https://doi.org/10.1016/j.ribaf.2018.12.011.

Eng, T. S. (2013). Pengaruh NIM, BOPO, LDR, NPL, & CAR terhadap ROA bank internasional dan bank nasional go public periode 2007-2011. Jurnal Dinamika Manajemen, 1(3), 153-167.

Fathyah, I., Sahara., & Tita, N. (2019). The Determinants of Non-Performing Financing and Non-Performing Loan on the Dual Banking System in Indonesia. AL-MUZARA’AH, 7(1), 26-39.

Friedman, J. H. (1991). Multivariate Adaptive Regression Splines. The Annals of Statistics, 19(1), 1-67.

Idris, I. T., & Nayan, S. (2016). The Joint Effects of Oil Price Volatility and Environmental Risks on Non-performing Loans: Evidence from Panel Data of Organization of the Petroleum Exporting Countries. Jurnal Manajemen, 2(3), 1-11.

Islam, K. M. Z., Alam, M. B., & Hossain, M. M. (2019). Impact of Credit Risk Management on Bank Performance: Empirical Evidence from Bangladesh. South Asian Journal of Management, 26(2), 32-64.

Johannes, W. (2014). Bank Management and Control; Strategy, Capital, and Risk Management. Berlin Heidelberg: Springer.

Jusmansyah, M., & Sriyanto, A. (2013). Analysis of CAR, BOPO and ROA effects against Non Performance Loans. Jurnal Akuntansi dan Keuangan, 2(1), 46-65.

Kasmir. (2014). Manajemen Perbankan. Jakarta: Rajawali Pers.

Khaled, S. (2016). Determinants of Non-Performing Loans: Evidence from the Jordanian Banking Sector. Journal of Finance and Bank Management, 4(1), 125-136.

Kristiani, N., & Sri, M. R. (2018). Pengaruh GDP, Inflasi, BI Rate, Nilai Tukar Terhadap Non Performing Loan Bank Umum Konvensional di Indonesia. Jurnal Administrasi Bisnis (JAB), 62(2), 12-28.

Kurniawan, C. & Utama, I.W.W, 2019, The Effect of Risk Profile, Income, and Capital Profiles on Earnings Changes in Banking Industries, Sustainable Business Accounting and Management Review, 1(1), 37-52

Linda., & Muthia, R. (2015). Pengaruh Inflasi, Kurs dan Tingkat Suku Bunga terhadap Non Performing Loan pada PT. Bank Tabungan Negara (Persero) Tbk Cabang Padang. Economica: Jurnal Program Studi Pendidikan Ekonomi STKIP PGRI Sumatera Barat, 3(2), 137-145.

Mahendra, R., & Mahardika, D. P. (2019). Analisis Pengaruh Karakteristik Bank dan Makro Ekonomi terhadap Tingkat Risiko Kredit Bermasalah. Jurnal Ilmiah MEA (Manajemen, Ekonomi, & Akuntansi), 3(3), 150-156.

Messai, A. S., & Fathi, J. (2013). Micro and Macro Determinants of Non-performing Loans. Journal of Economics, 3(4), 852-860.

Muthia, R. L. (2015). Influence Inflation, Exchange Rate, and Rate of Non-Performing Loan At PT. State Savings Bank (Persero) Tbk Padang Branch. Economica Journal Of Economic And Economic Education, 3(2), 137-145.

Ossamah, M. A. (2017). The Impact of Oil Price Movements on Bank Non-Performing Loans: Global Evidence From Oil-Exporting Countries. Emerging Market Review, 3(1), 193-208.

Ozili, P. (2019). Non-Performing Loans and Financial Development: New Evidence. The Journal of Risk Finance, 20(2), 1-34.

Perdana M., & Adriana C. (2018, June 30). Factors Influencing the Stock Price of Banking Companies in the Indonesia Stock Exchange. Journal of Accounting and Strategic Finance, 1(1), 57-68. https://doi.org/https://doi.org/10.33005/jasf.v1i01.26

Radosław, C., & Krzysztof, K. (2020). Determinants of the non-performing loan ratio in the European Union banking sectors with a high level of impaired loans. Economics and Business Review, 6(1), 22-45.

Saba, I. R., Kouser., & Muhammad, A. (2012). Determinants of Non Performing Loans: Case of US Banking Sector. Journal of Economics, 14(44), 14-29.

Suryani, A., Suhadak., & Raden, R. H. (2016). Pengaruh rasio capital adequacy ratio, biaya operasional per pendapatan operasional, loan to deposit ratio, net interest margin, dan non performing loan terhadap return on asset. Jurnal Administrasi Bisnis (JAB), 33(1), 105-113.

Utari, G. A., Trinil, A., & Ina, N. K. (2012). Optimal Credit Growth. Economic and Banking Bulletin, Bank Indonesia, 1(1), 3-36.

Warue, B. N. (2013). The Effects of Bank Specific and Macroeconomic Factors on Nonperforming Loans in Commercial Banks in Kenya: A Comparative Panel Data Analysis. Advances in Management & Applied Economics, 3(2), 135-164.

Weidong, T. (2017). Commercial Banking Risk Management: Regulation in the Wake of the Financial Crisis. . US.: Palgrave Macmillan.

Wooldridge, J. M. (2013). Introductory Econometrics: A Modern Approach: South-Western Cengage Learning.

Yahaya, K. A., & Oni, O. (2016). Impact of Macroeconomic Factors on Non-Performing Loan in the Nigerian Deposit Money Bank. Amity Global Business Review, 11(1), 68-78.

Yesica, Y. A., & Irene, R. (2015). The Effect of Gross Domestic Bruto, Rate, Export, Credit Growth And Operating Expenses and Operating Income to Non-Performing Loan in Indonesia. Diponegoro Journal of Management, 4(3), 1-12.
Published
2020-11-13
How to Cite
ShonhadjiN. (2020, November 13). What Most Influence on Non-Performing Loan in Indonesia? Bank Accounting Perspective with Mars Analysis. Journal of Accounting and Strategic Finance, 3(2), 136-153. https://doi.org/https://doi.org/10.33005/jasf.v3i2.85