Silaban, Dita Nurlita (2026) THE IMPACT OF INTEREST RATES, INFLATION, AND MONEY SUPPLY ON NON-PERFORMING LOANS OF CONVENTIONAL COMMERCIAL BANKS IN INDONESIA. Undergraduate thesis, UPN Veteran Jawa Timur.
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Abstract
The stability of conventional banking in Indonesia is reflected through the Non-Performing Loan (NPL) ratio, which serves as a key indicator of credit quality. This study aims to analyze the effect of interest rates, inflation, and money supply (M2) on NPL of conventional commercial banks in Indonesia in both the short and long term. This study uses secondary data in the form of monthly time series data for the period January 2016 to December 2024, sourced from the Financial Services Authority (OJK), Bank Indonesia (BI), and the Central Statistics Agency (BPS). The analytical method employed is the Vector Error Correction Model (VECM), preceded by a series of tests including stationarity test, optimal lag determination, and Johansen cointegration test. The results show that in the short term, only money supply (M2) has a significant negative effect on NPL. In the long term, interest rates have a significant positive effect while M2 has a significant negative effect on NPL. Meanwhile, inflation has no significant effect on NPL in either the short or long term. These findings imply that monetary policy through the control of money supply and interest rate setting are the most influential instruments in maintaining the stability of credit quality in Indonesian conventional banking. Keywords: Non-Performing Loan, Interest Rate, Inflation, Money Supply, VECM
| Item Type: | Thesis (Undergraduate) | ||||||||
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| Subjects: | H Social Sciences > HC Economics | ||||||||
| Divisions: | Faculty of Economic and Business > Departement of Economics | ||||||||
| Depositing User: | Dita Nurlita Silaban | ||||||||
| Date Deposited: | 26 May 2026 07:40 | ||||||||
| Last Modified: | 26 May 2026 07:40 | ||||||||
| URI: | https://repository.upnjatim.ac.id/id/eprint/52846 |
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