What is the determinant of non-performing financing in branch Sharia regional bank in Indonesia

Abstract

Purpose – The aim of this study is to analyze the effects of macro- and micro-economic variables on the ratio of troubled financing (Non-Performing Financing, NPF). Design/Methodology/Approach – The method used in this research is the data panel fixed effect with 13 banks and 4 periods of data report (semi-annual report 2014–2015). Findings – The regression result achieved that variable inflation significantly influences the ratio of NPF. Variable Gross Domestic Product and assets total significantly influence the ratio of NPF too. While the SBI sharia’s variable and Financing to Deposit Ratio did not significantly affect NPF in Syariah’s Unit of Aceh Bank Pembangunan Daerah (BPD) in Indonesia. Research Limitations/Implications – This study uses panel data which are a combination of time series data and cross-section. Practical Implications – The policymakers can design a macro-policy carefully and better fiscal policies. Originality/Value – This research was conducted on the Syariah’s Unit of BPD in Indonesia during the period 2014–2015 and it has not been done before.