Analysis of External and Internal Factors Influence on Islamic Bank Nonperforming Financing (Case Study: Bank Brisyariah Private Company)

Abstract

This paper intergrates themes from external and internal factors that influence Bank Brisyariahs nonperforming financing (NPF) periods from the first quarter 2010 to second quarter 2017 by using a descriptive analysis approach and multiple regression analysis. External variables consist of inflation rates, benchmark interest rate/BI rates, economic growth, and USD/IDR exchange rate, while internal factors consist of return on asset (ROA), net income margin (NIM), financing growth, financing to deposit ratio (FDR), and NPF management. Based on these methodologies, four significant factors are utilized: 1) NPF on commercial financing influenced sequentially by net interest margin (NIM), financing to deposits ratio (FDR), NPF management, benchmark interest rate, inflation and economic growth level; 2) NPF on retail consumers influenced by financing growth factors, benchmark interest rates, and inflation; 3) NPF on small and medium retail enterprises (SME) significantly influenced by financing growth factors and benchmark interest rates; 4) NPF on micro retail influenced by net interest margin (NIM), financing to deposit ratio (FDR), benchmark interest rates, inflation and economic growth.