Copyright (c) 2023 Laynita Sari, Febryandhie Ananda, Dewi Zulfia, Muhammad Rivandi, Mike Kusuma Dewi
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
THE IMPACT OF NON-PERFORMING LOANS ON COMPANY PROFITS
Corresponding Author(s) : Laynita Sari
International Research of Multidisciplinary Analysis,
Vol. 1 No. 6 (2023): International Research of Multidisciplinary Analysis
Abstract
This study aims to determine the effect of Non-Performing Loans on the profits of banking companies in Indonesia. Non-performing loans and company profit are obtained from the company's financial statements and from the Indonesia Stock Exchange website. The research sample amounted to four banks of State-Owned Enterprises in Indonesia from 2014-2022. The type of data used is secondary data in the form of annual reports of State-Owned Enterprises Banks for the 2014-2022 period. The data analysis technique uses multiple linear regression analysis with the help of the E-Views program version 12. This study found that Non-Performing Loans provide empirical evidence of a significant negative effect on the profits of banking companies of State-Owned Enterprises Banks in 2014-2022 significantly
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- Abraham, R., Bhimavarapu, V. M., Tao, Z., & Rastogi, S. (2023). The Influence of Cash Ownership on Financial Performance: An Examination of Disruptors and Acquirers. Journal of Risk and Financial Management, 16(3), 197. https://doi.org/10.3390/jrfm16030197
- Akhter, N. (2023). Determinants of commercial bank’s non-performing loans in Bangladesh: An empirical evidence. Cogent Economics and Finance, 11(1). https://doi.org/10.1080/23322039.2023.2194128
- Almaqtari, F. A., Al-Homaidi, E. A., Tabash, M. I., & Farhan, N. H. (2019). The determinants of profitability of Indian commercial banks: A panel data approach. International Journal of Finance and Economics, 24(1), 168–185. https://doi.org/10.1002/ijfe.1655
- Amrani, O., & Najab, A. (2023). The Impact of Multi-Layer Corporate Governance on Banks’ Performance under the GFC and the COVID-19: A Cross-Country Panel Analysis Approach. Journal of Risk and Financial Management, 16(1). https://doi.org/10.3390/jrfm16010015
- Ananda, R. F. (2020). Pengaruh Capital Adequacy Ratio Dan Non Performing Financing Terhadap Profitabilitas Bank Umum Syariah Di Indonesia. At-Tawassuth: Jurnal Ekonomi Islam, 5(2), 423–442.
- Anugrah, T., & Yatna, C. N. (2020). Pengaruh Non Performing Loan, Loan To Deposit Ratio, Net Interest Margin, Biaya Operasional Pendapatan Operasional Dan Capital Adequacy Ratio Terhadap Profitabilitas Bank Umum Konvensional Buku 4 Periode 2012-2016. Perbanas Review, 4(1).
- Basuki, A. T. (2017). ANALISIS REGRESI DALAM PENELITIAN EKONOMI DAN BISNIS.
- de Jonghe, O., Dewachter, H., Mulier, K., Ongena, S., & Schepens, G. (2020). Some borrowers are more equal than others: Bank funding shocks and credit reallocation. Review of Finance, 24(1), 1–3. https://doi.org/10.1093/rof/rfy040
- Drechsler, I., Savov, A., & Schnabl, P. (2021). Banking on Deposits: Maturity Transformation without Interest Rate Risk. Journal of Finance, 76(3), 1091–1143. https://doi.org/10.1111/jofi.13013
- Duong, K. D., Tran, P. M. D., Nguyen, P. Y. N., & Pham, H. (2023). How do funding diversity and non-performing loans affect bank performance in different economic cycles? Cogent Business and Management, 10(2). https://doi.org/10.1080/23311975.2023.2215076
- Fazriani, A. D., & Mais, R. G. (2019). Pengaruh Pembiayaan Mudharabah, Musyarakah, dan Murabahah terhadap Return On Asset melalui Non Performing Financing sebagai Variabel Intervening (pada Bank Umum Syariah yang Terdaftar diotoritas Jasa Keuangan). Jurnal Akuntansi Dan Manajemen, 16(01), 1–34.
- Foos, D., Lütkebohmert, E., Markovych, M., & Pliszka, K. (2022). Euro area banks’ interest rate risk exposure to level, slope and curvature swings in the yield curve. European Financial Management, 28(4), 883–925. https://doi.org/10.1111/eufm.12377
- Gashi, A., Tafa, S., & Bajrami, R. (2022). The Impact of Macroeconomic Factors on Non-performing Loans in the Western Balkans. Emerging Science Journal, 6(5), 1032–1045. https://doi.org/10.28991/ESJ-2022-06-05-08
- Ha, D., & Nguyen, Y. (2023). Institutional quality’s influence on financial inclusion’ impact on bank stability. Cogent Economics and Finance, 11(1). https://doi.org/10.1080/23322039.2023.2190212
- Handoyo, S., Wicaksono, A. P., Hardinto, W., & Fauzia, D. (2023). an Empirical Study on Regional Government-Owned Bank and Local Government Fund in Indonesia. International Journal of Professional Business Review, 8(3), 1–20. https://doi.org/10.26668/businessreview/2023.v8i3.660
- Izzah, R. N., Kosim, A. M., & Gustiawati, S. (2019). Pengaruh Non Performing Financing Dan Capital Adequacy Ratio Terhadap Profitabilitas. Al Maal: Journal of Islamic Economics and Banking, 1(1), 18–36.
- Kanapickienė, R., Keliuotytė-Staniulėnienė, G., Teresienė, D., Špicas, R., & Neifaltas, A. (2022). Macroeconomic Determinants of Credit Risk: Evidence on the Impact on Consumer Credit in Central and Eastern European Countries. Sustainability (Switzerland), 14(20), 1–62. https://doi.org/10.3390/su142013219
- Kasmir, S. E. (2018). Bank dan lembaga keuangan lainnya edisi revisi.
- Korri, N. T. L., & Baskara, I. G. K. (2019). Pengaruh capital adequacy ratio, non performing Loan, bopo, dan loan to deposit ratio terhadap profitabilitas. Udayana University.
- Kovalenko, V., Slatvinska, M., Sheludko, S., Makukha, S., & Valihura, V. (2023). the Monetary Component in Ensuring the Financial Security of the State. Financial and Credit Activity Problems of Theory and Practice, 1(48), 8–22. https://doi.org/10.55643/fcaptp.1.48.2023.3972
- Kyei, C. B., Asafo-Adjei, E., Owusu Junior, P., Adam, A. M., Idun, A. A. A., & Boateng, J. K. G. A. (2023). Nexus between commodities and banking sector financial soundness: The role of general macroeconomic setting in Ghana. Cogent Economics and Finance, 11(1). https://doi.org/10.1080/23322039.2023.2173871
- Malik, A. (2020). Pengaruh Loan To Deposit Ratio (LDR) Terhadap Profitabilitas Dengan Non Performing Loan (NPL) Sebagai Variabel Intervening Pada Subsektor Perbankan. Sains Manajemen: Jurnal Manajemen Unsera, 6(1), 13–22.
- Marouli, A. Z., Giannini, E. N., & Caloghirou, Y. D. (2023). A Non-Performing Loans (NPLs) Portfolio Pricing Model Based on Recovery Performance: The Case of Greece. Risks, 11(5). https://doi.org/10.3390/risks11050096
- Nerantzidis, M., Koutoupis, A., Tzeremes, P., Drogalas, G., & Mitskinis, D. (2023). the Effects of Covid-19 on Firms’ Liquidity: Evidence From the Athens Stock Exchange. Journal of Business Economics and Management, 24(1), 155–176. https://doi.org/10.3846/jbem.2023.18637
- O. Okey-Nwala, P., I. Kenn-Ndubuisi, J., & I. Wachukwu, P. (2021). Credit Risk Management and the Performance of Nigerian Deposit Money Banks. BOHR International Journal of Finance and Market Research, 1(1), 92–95. https://doi.org/10.54646/bijfmr.015
- Oyetade, D., Obalade, A. A., & Muzindutsi, P. F. (2022). Changes in Basel Capital Requirements and Lending Ability of African Commercial Banks. Journal of Central Banking Theory and Practice, 11(3), 179–201. https://doi.org/10.2478/jcbtp-2022-0029
- Özen, E., Hodžić, S., & Yildirim, A. E. (2022). The Linkage between Fiscal Policy and Non-Performing Household Loans in Turkey. South East European Journal of Economics and Business, 17(2), 113–124. https://doi.org/10.2478/jeb-2022-0018
- Safitri, A. (2019). Pengaruh Pembiayaan Murabahah, Mudharabah Dan Musyarakah Terhadap Profitabilitas Dengan Non Performing Financing (NPF) Sebagai Variabel Moderasi Pada Bank Umum Syariah Dan Bank Pembiayaan Rakyat Syariah Di Indonesia (Tahun 2013-2017). IAIN SALATIGA.
- Sari, L., Mary, H., Elfiswandi, E., Zefriyenni, Z., & Lusiana, L. (2021). Kinerja Perusahaan Dan Bi Rate Terhadap Return Saham Bank Bumn. Jurnal Ekonomi Manajemen Sistem Informasi, 2(4), 544–555.
- Sari, L., Nurfazira, N., & Septiano, R. (2021). Pengaruh Non Performing Loan, Suku Bunga Kredit, Dan Modal Bank Terhadap Penyaluran Kredit Pada Perusahaan Perbankan LQ 45. Jurnal Ekonomi Manajemen Sistem Informasi, 2(6), 702–713.
- Sari, L., Rahmadani, A., & Septiano, R. (2023). Pengaruh Current Ratio Dan Return On Asset Terhadap Harga Saham Perusahaan Manufaktur.
- Sari, L., Tanno, A., & Putri, A. (2020). Peran NPL Terhadap Hubungan Antara LDR dan Kinerja Perusahaan (Study Empiris Pada Bank BUMN yang Terdaftar di BEI). Jurnal Ilmiah Administrasi Bisnis Dan Inovasi, 3(2), 133.
- Sari, S., Ajija, S. R., Wasiaturrahma, W., & Ahmad, R. A. R. (2022). The Efficiency of Indonesian Commercial Banks: Does the Banking Industry Competition Matter? Sustainability (Switzerland), 14(17), 1–16. https://doi.org/10.3390/su141710995
- Sugiyono. (2017). Metode Penelitian Kuantitatif, Kualitatif, dan R&D. CV. Alfabeta.
- Suprianto, E., Setiawan, H., & Rusdi, D. (2020). Pengaruh Non Performing Financing (NPF) Terhadap Profitabilitas Bank Syariah di Indonesia. Wahana Riset Akuntansi, 8(2), 140–146.
- Yusuf, M., Sari, L., Septiano, R., Nuryati, S., Lestari, I. D., Arief, Z., Hernawan, M. A., Nurhayati, S., & Azizah, K. (2022). FINANCIAL RATIO MODEL AND APPLICATION OF GOOD CORPORATE GOVERNANCE TO NPL WITH INFLATION AS A MODERATE VARIABLE. Journal of Management Information & Decision Sciences, 25.
- Zhuang, Y., & Wei, H. (2023). Early warning model and prevention of regional financial risk integrated into legal system. PLoS ONE, 18(6 June), 1–19. https://doi.org/10.1371/journal.pone.0286685
References
Abraham, R., Bhimavarapu, V. M., Tao, Z., & Rastogi, S. (2023). The Influence of Cash Ownership on Financial Performance: An Examination of Disruptors and Acquirers. Journal of Risk and Financial Management, 16(3), 197. https://doi.org/10.3390/jrfm16030197
Akhter, N. (2023). Determinants of commercial bank’s non-performing loans in Bangladesh: An empirical evidence. Cogent Economics and Finance, 11(1). https://doi.org/10.1080/23322039.2023.2194128
Almaqtari, F. A., Al-Homaidi, E. A., Tabash, M. I., & Farhan, N. H. (2019). The determinants of profitability of Indian commercial banks: A panel data approach. International Journal of Finance and Economics, 24(1), 168–185. https://doi.org/10.1002/ijfe.1655
Amrani, O., & Najab, A. (2023). The Impact of Multi-Layer Corporate Governance on Banks’ Performance under the GFC and the COVID-19: A Cross-Country Panel Analysis Approach. Journal of Risk and Financial Management, 16(1). https://doi.org/10.3390/jrfm16010015
Ananda, R. F. (2020). Pengaruh Capital Adequacy Ratio Dan Non Performing Financing Terhadap Profitabilitas Bank Umum Syariah Di Indonesia. At-Tawassuth: Jurnal Ekonomi Islam, 5(2), 423–442.
Anugrah, T., & Yatna, C. N. (2020). Pengaruh Non Performing Loan, Loan To Deposit Ratio, Net Interest Margin, Biaya Operasional Pendapatan Operasional Dan Capital Adequacy Ratio Terhadap Profitabilitas Bank Umum Konvensional Buku 4 Periode 2012-2016. Perbanas Review, 4(1).
Basuki, A. T. (2017). ANALISIS REGRESI DALAM PENELITIAN EKONOMI DAN BISNIS.
de Jonghe, O., Dewachter, H., Mulier, K., Ongena, S., & Schepens, G. (2020). Some borrowers are more equal than others: Bank funding shocks and credit reallocation. Review of Finance, 24(1), 1–3. https://doi.org/10.1093/rof/rfy040
Drechsler, I., Savov, A., & Schnabl, P. (2021). Banking on Deposits: Maturity Transformation without Interest Rate Risk. Journal of Finance, 76(3), 1091–1143. https://doi.org/10.1111/jofi.13013
Duong, K. D., Tran, P. M. D., Nguyen, P. Y. N., & Pham, H. (2023). How do funding diversity and non-performing loans affect bank performance in different economic cycles? Cogent Business and Management, 10(2). https://doi.org/10.1080/23311975.2023.2215076
Fazriani, A. D., & Mais, R. G. (2019). Pengaruh Pembiayaan Mudharabah, Musyarakah, dan Murabahah terhadap Return On Asset melalui Non Performing Financing sebagai Variabel Intervening (pada Bank Umum Syariah yang Terdaftar diotoritas Jasa Keuangan). Jurnal Akuntansi Dan Manajemen, 16(01), 1–34.
Foos, D., Lütkebohmert, E., Markovych, M., & Pliszka, K. (2022). Euro area banks’ interest rate risk exposure to level, slope and curvature swings in the yield curve. European Financial Management, 28(4), 883–925. https://doi.org/10.1111/eufm.12377
Gashi, A., Tafa, S., & Bajrami, R. (2022). The Impact of Macroeconomic Factors on Non-performing Loans in the Western Balkans. Emerging Science Journal, 6(5), 1032–1045. https://doi.org/10.28991/ESJ-2022-06-05-08
Ha, D., & Nguyen, Y. (2023). Institutional quality’s influence on financial inclusion’ impact on bank stability. Cogent Economics and Finance, 11(1). https://doi.org/10.1080/23322039.2023.2190212
Handoyo, S., Wicaksono, A. P., Hardinto, W., & Fauzia, D. (2023). an Empirical Study on Regional Government-Owned Bank and Local Government Fund in Indonesia. International Journal of Professional Business Review, 8(3), 1–20. https://doi.org/10.26668/businessreview/2023.v8i3.660
Izzah, R. N., Kosim, A. M., & Gustiawati, S. (2019). Pengaruh Non Performing Financing Dan Capital Adequacy Ratio Terhadap Profitabilitas. Al Maal: Journal of Islamic Economics and Banking, 1(1), 18–36.
Kanapickienė, R., Keliuotytė-Staniulėnienė, G., Teresienė, D., Špicas, R., & Neifaltas, A. (2022). Macroeconomic Determinants of Credit Risk: Evidence on the Impact on Consumer Credit in Central and Eastern European Countries. Sustainability (Switzerland), 14(20), 1–62. https://doi.org/10.3390/su142013219
Kasmir, S. E. (2018). Bank dan lembaga keuangan lainnya edisi revisi.
Korri, N. T. L., & Baskara, I. G. K. (2019). Pengaruh capital adequacy ratio, non performing Loan, bopo, dan loan to deposit ratio terhadap profitabilitas. Udayana University.
Kovalenko, V., Slatvinska, M., Sheludko, S., Makukha, S., & Valihura, V. (2023). the Monetary Component in Ensuring the Financial Security of the State. Financial and Credit Activity Problems of Theory and Practice, 1(48), 8–22. https://doi.org/10.55643/fcaptp.1.48.2023.3972
Kyei, C. B., Asafo-Adjei, E., Owusu Junior, P., Adam, A. M., Idun, A. A. A., & Boateng, J. K. G. A. (2023). Nexus between commodities and banking sector financial soundness: The role of general macroeconomic setting in Ghana. Cogent Economics and Finance, 11(1). https://doi.org/10.1080/23322039.2023.2173871
Malik, A. (2020). Pengaruh Loan To Deposit Ratio (LDR) Terhadap Profitabilitas Dengan Non Performing Loan (NPL) Sebagai Variabel Intervening Pada Subsektor Perbankan. Sains Manajemen: Jurnal Manajemen Unsera, 6(1), 13–22.
Marouli, A. Z., Giannini, E. N., & Caloghirou, Y. D. (2023). A Non-Performing Loans (NPLs) Portfolio Pricing Model Based on Recovery Performance: The Case of Greece. Risks, 11(5). https://doi.org/10.3390/risks11050096
Nerantzidis, M., Koutoupis, A., Tzeremes, P., Drogalas, G., & Mitskinis, D. (2023). the Effects of Covid-19 on Firms’ Liquidity: Evidence From the Athens Stock Exchange. Journal of Business Economics and Management, 24(1), 155–176. https://doi.org/10.3846/jbem.2023.18637
O. Okey-Nwala, P., I. Kenn-Ndubuisi, J., & I. Wachukwu, P. (2021). Credit Risk Management and the Performance of Nigerian Deposit Money Banks. BOHR International Journal of Finance and Market Research, 1(1), 92–95. https://doi.org/10.54646/bijfmr.015
Oyetade, D., Obalade, A. A., & Muzindutsi, P. F. (2022). Changes in Basel Capital Requirements and Lending Ability of African Commercial Banks. Journal of Central Banking Theory and Practice, 11(3), 179–201. https://doi.org/10.2478/jcbtp-2022-0029
Özen, E., Hodžić, S., & Yildirim, A. E. (2022). The Linkage between Fiscal Policy and Non-Performing Household Loans in Turkey. South East European Journal of Economics and Business, 17(2), 113–124. https://doi.org/10.2478/jeb-2022-0018
Safitri, A. (2019). Pengaruh Pembiayaan Murabahah, Mudharabah Dan Musyarakah Terhadap Profitabilitas Dengan Non Performing Financing (NPF) Sebagai Variabel Moderasi Pada Bank Umum Syariah Dan Bank Pembiayaan Rakyat Syariah Di Indonesia (Tahun 2013-2017). IAIN SALATIGA.
Sari, L., Mary, H., Elfiswandi, E., Zefriyenni, Z., & Lusiana, L. (2021). Kinerja Perusahaan Dan Bi Rate Terhadap Return Saham Bank Bumn. Jurnal Ekonomi Manajemen Sistem Informasi, 2(4), 544–555.
Sari, L., Nurfazira, N., & Septiano, R. (2021). Pengaruh Non Performing Loan, Suku Bunga Kredit, Dan Modal Bank Terhadap Penyaluran Kredit Pada Perusahaan Perbankan LQ 45. Jurnal Ekonomi Manajemen Sistem Informasi, 2(6), 702–713.
Sari, L., Rahmadani, A., & Septiano, R. (2023). Pengaruh Current Ratio Dan Return On Asset Terhadap Harga Saham Perusahaan Manufaktur.
Sari, L., Tanno, A., & Putri, A. (2020). Peran NPL Terhadap Hubungan Antara LDR dan Kinerja Perusahaan (Study Empiris Pada Bank BUMN yang Terdaftar di BEI). Jurnal Ilmiah Administrasi Bisnis Dan Inovasi, 3(2), 133.
Sari, S., Ajija, S. R., Wasiaturrahma, W., & Ahmad, R. A. R. (2022). The Efficiency of Indonesian Commercial Banks: Does the Banking Industry Competition Matter? Sustainability (Switzerland), 14(17), 1–16. https://doi.org/10.3390/su141710995
Sugiyono. (2017). Metode Penelitian Kuantitatif, Kualitatif, dan R&D. CV. Alfabeta.
Suprianto, E., Setiawan, H., & Rusdi, D. (2020). Pengaruh Non Performing Financing (NPF) Terhadap Profitabilitas Bank Syariah di Indonesia. Wahana Riset Akuntansi, 8(2), 140–146.
Yusuf, M., Sari, L., Septiano, R., Nuryati, S., Lestari, I. D., Arief, Z., Hernawan, M. A., Nurhayati, S., & Azizah, K. (2022). FINANCIAL RATIO MODEL AND APPLICATION OF GOOD CORPORATE GOVERNANCE TO NPL WITH INFLATION AS A MODERATE VARIABLE. Journal of Management Information & Decision Sciences, 25.
Zhuang, Y., & Wei, H. (2023). Early warning model and prevention of regional financial risk integrated into legal system. PLoS ONE, 18(6 June), 1–19. https://doi.org/10.1371/journal.pone.0286685