Determinants of non-performing loans in Regional Development Banks (BPD) in Indonesia

Febri Nanda Marchela and Purwanto Widodo
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Febri Nanda Marchela: Economic Development, Universitas Pembangunan Nasional Veteran, Jl. R.S Fatmawati No. 1, Cilandak, Jakarta Selatan 12450, Indonesia
Purwanto Widodo: Economic Development, Universitas Pembangunan Nasional Veteran, Jl. R.S Fatmawati No. 1, Cilandak, Jakarta Selatan 12450, Indonesia

International Journal of Research in Business and Social Science (2147-4478), 2023, vol. 12, issue 3, 263-271

Abstract: The country's macroeconomic conditions, whether directly and indirectly will influence the development of the financial and banking sector. This study aims to determine the effect of macroeconomic and internal company variables consisting of BOPO, ROA, money supply, and the unemployment rate on non-performing loans (NPL) in Indonesian banking, especially Regional Development Banks (BPD). The sampling technique used is purposive sampling technique. There are 20 Regional Development Banks (BPD) that met the requirements determined by the observation period from 2008-2021. The data processing method used is panel data regression. Model selection uses the Chow test, Hausman test and Langgrange Multiplier test (LM Test). Based on this, the appropriate model is the Fixed Effect Model (FEM). Testing the classical assumptions of FEM shows that there is a heteroscedasticity problem, then it is recovered using the Feasible Generalized Least Square (FGLS). The results of the analysis show that the variables BOPO, ROA, money supply, and unemployment rates both simultaneously and individually have a significant positive effect on the NPL of Regional Development Banks. Key Words:Non Performing Loan, Operating Costs To Operating Income (BOPO), Return On Asset (ROA), Money Supply, Unemployment Rate

Date: 2023
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