ANALYSIS OF EXTERNAL AND INTERNAL INFLUENCES ON NON-PERFORMING LOANS OF BANK XYZ

Abstract

This research aimed to analyze the impact of internal and external factors on non-performing loans (NPL) in Bank XYZ. Analyze using Error Correction Model (ECM) with time-series data from 2010 – 2017. The variable used in this research consists of external factors, they were GDP and BI Rate, and internal factors are loan growth, ROA, and GCG. The result in this research on the long-term model GDP had a significant negative impact on NPL Total and all segments, but it was the opposite in the short-term model, it has a positive and significant impact on Total NPL, Micro NPL, and Retail NPL. The BI Rate variable has no effect the long and short-term models. In the long-term model, the internal factor loan growth significantly affects Total NPL, Retail NPL and Medium NPL. ROA has a negative and significant impact on the overall NPL of Bank XYZ. Moreover, GCG does not involve changes in NPL. In the short-term model, the loan growth variable has a negative and significant effect on Retail NPL and Medium NPL in the short-term model. On the other hand, Corporate NPL has a positive and significant impact. ROA variable has a negative and significant effect on Total NPL, Micro NPL, Medium NPL and Corporate NPL. GCG only has a negative and significant impact on Corporate NPL.

Keywords

• non-performing loan
• credit
• error correction model (ecm)