Analysis of Non-Performing Loans in the Banking Sector in Indonesia

Abstract

The objective of this study is to analyze the relationship between non-performing loans of financial institutions listed on the Indonesia Stock Exchange (IDX) during the 2021–2024 period and macroeconomic variables as well as bank-specific factors. This study compares Non-Performing Loans with four independent variables: Bank Efficiency, Capital Adequacy Ratio, Income Diversification, and Return on Assets. Secondary data for this research were obtained from the financial statements of banking companies listed on the IDX for the 2021–2024 period. This study employs a purposive sampling strategy. Using information obtained from www.idx.co.id, the study analyzes the annual reports of 29 different companies. Panel regression analysis is applied to examine the collected data. Based on the findings, Bank Efficiency and Return on Assets are partially significant factors affecting NPL. There is no correlation between NPL and Income Diversification or Capital Adequacy Ratio. However, from 2021 to 2024, the NPL of banks listed on the IDX is jointly influenced by Bank Efficiency, Capital Adequacy Ratio, Income Diversification, and Return on Assets.