Determinants of Non-Performing Financing: Evidence from Islamic Commercial Banks in Indonesia (2019–2024)

Abstract

This study aims to examine the impact of exogenous and endogenous factors on the level of non-performing financing (NPF) in the Indonesian Islamic banking sector. The sample used includes ten Islamic Commercial Banks (BUS), with secondary data sourced from quarterly financial reports published by these banks for the period 2019 to 2024. In addition, supporting data was obtained from the Central Statistics Agency (BPS), the Financial Services Authority (OJK), and Bank Indonesia. Data analysis was performed using Eviews 12 software and Microsoft Excel using a panel data regression approach to examine the relationship between variables. The results indicate that external factors such as inflation and the Financing to Deposit Ratio (FDR) do not significantly influence NPF. Conversely, internal factors such as Gross Domestic Product (GDP), Return on Assets (ROA), and the Capital Adequacy Ratio (CAR) have a significant influence on NPF. These findings provide important insights for managing non-performing financing risks and efforts to maintain financial stability in Islamic banking. This research is expected to be a reference in the preparation of financing risk mitigation strategies as well as a basis for subsequent research that examines the determinants of problematic financing in the Islamic banking sector.

Keywords: Non-Performing Financing (NPF), Islamic Commercial Banks, Panel Data Analysis, Eviews 12