Factors Affecting Credit Risk of Conventional Banks Listed in Indonesia Stock Exchange

Abstract

This research aims to analyze factors affecting bank credit risk. The sample of this study uses 34 conventional banks listed in Indonesia Stock Exchange for the period of 2015-2019. The sampling technique uses purposive sampling and the analysis method uses panel data regression. The independent variable in this study consists of bank size, return on assets, loan to deposit ratio, lending interest rate, gross domestic product, and inflation rate, while the dependent variable is non-performing loans. The result shows that return on assets and inflation rate have significant negative effect on non-performing loans while gross domestic product has significant positive effect on non-performing loans. On the contrary, bank size, loan to deposit ratio, and lending interest rate have no effect on non-performing loans. The findings are expected to be the reference for conventional banks in minimizing the credit risk by increasing the profitability and improving a better credit management when the economic growth, and inflation rate are getting higher.