Hanifan Fajar

The present study focuses on the need for banking sector to be more reactive when facing globalization that could bring impact on banking industries complexity. Based on empirical studies, there is a need to analyze non performing loan determinants comprehensively using macroeconomic and bank-specific factors to make a good condition on bank, because combining macroeconomic and bank-specific variable as NPL determinants has made a big improvement to analyze NPL. The object of present study is 20 Banks listed in Indonesia Stock Exchange (IDX) between q12005-q42014. Using dynamic panel data GMM-system method shows that the previous period of NPL (non performing loan), change of PDB (Gross Domestic Product) and inflation rate have a significantly negative impact on NPL. However, BOPO (Operations Expenses to Operations Income) and ROE (Return on Equity) has a significantly positve relationship to NPL. On the other hand, this research does not find any significance on BI rate (interest rate), solvency ratio, and size to NPL. From the result, it can be concluded that combining macroeconomic and bank-specific variable could be an alternative method to analyze NPL determinants on bank.

Keywords: nonperforming loans, banks, credit risk, globalization, dynamic panel data, banking industries.
JEL Classification: G21, E44, E51, E5, F60