Non Performing Loans Exchange Rates And Inflation In Indonesia

English

Abstract

This study uses the Vector Error Correction Model to analyze secondary data from Bank Indonesia and the Indonesian Central Statistics Agency from 2000 to 2020. This sort of study falls under the category of quantitative research since its goal is to provide data in the form of numbers that can be utilized as a tool for information analysis about the subject at hand. This study looks at how non-performing loans (NPL), lending, bank size, currency rates, and inflation all interact. The result of this research is Non-performing loans are getting higher following the size of the bank, the level of credit, the increase in the rupiah interest rate in Indonesia, and the increase in inflation. The higher inflation in Indonesia will increase non-performing loans. Likewise, the larger the size of the bank also increases the number of non-performing loans. The higher the credit disbursed, the higher the risk of increasing non-performing loans. So based on the results of the investigation in this study, a prudential policy must be applied in granting credit.