Risk of Non-Performing Financing of Islamic Banks Based on Bank Financial Performance and Macroeconomic Conditions
Keywords:
Non Performing Financing Risk, Financial Performance, Microeconomics, Sharia Commercial BanksAbstract
Non-Performing Financing (NPF) is an important indicator in measuring the level of risk of problematic financing in the Islamic banking sector. Many factors, both internal and external factors of the bank, influence NPF. Internal factors include the bank's financial performance while external factors can be macroeconomic factors. This study aims to analyze the influence of bank financial performance; Capital Adequacy Ratio (CAR), Financing to Deposit Ratio (FDR), Return on Assets (ROA), Gross Domestic Product (GDP), and inflation on Non-Performing Financing (NPF) in the Islamic banking industry. The population in this study were Islamic Commercial Banks registered with the Financial Services Authority (OJK) for 2018 - 2021, with a sample size of 6 Islamic Banks. The data used in this study are secondary, taken from the financial statements of Islamic banks and macroeconomic data for a certain period. The sampling technique used is purposive sampling. The data analysis technique uses SEM-PLS with the help of SmartPLS 3.0. This study shows that ROA has a significant negative effect on NPF. Furthermore, CAR, GDP, and inflation have a negative but insignificant effect on NPF, while FDR has a positive but insignificant impact on NPF.