What Causes Non-Performance Financing? Insights From Islamic Commercial Banks in Indonesia and Malaysia

Auliana Yuwannita, Ratna Mulyany, Heru Fahlevi


This study aims to assess the determinants of Non-Performing Financing (NPF), particularly in the Islamic Commercial Banks (ICBs) setting. It seeks to test the effect of financing to deposit ratio (FDR), capital adequacy ratio (CAR), and return ratio (RR) on NPF at the ICBs in Indonesia and Malaysia, being the largest Islamic financial hubs in SoutheastAsian region. The whole population were 13 ICBs in Indonesia and 16 ICBs in Malaysia for the observation period from 2014 to 2018, resulting in 142 observations. The period was selected to avoid the effect of COVID-19 pandemic towards the variables tested in this study. This study uses multiple linear analyses of panel data to analyze the data collected. It was found that FDR, CAR, and RR, respectively, have an impact on the level of NPF. At the country-specific level, for ICBs in Indonesia, FDR was found to have a positive effect on the NPF level, while CAR and RR have a negative effect on NPF. Meanwhile for ICBs in Malaysia, all independent variables, namely FDR, CAR, and RR have a positive effect on the NPF level. The slightly variation in the findings may be attributed to the different regulatory settings in the two countries which may need further evidence. The findings of this study imply that NPF determinants may have different influence in two neighboring countries despite they seem to share many similar regional characteristics. The findings also suggest that to maintain low level of NPF the ICB may need to focus on the attributes of FDR, CAR and RR.


non-performance financing; financing to deposit ratio; capital adequacy ratio; return ratio; Islamic bank

Full Text:



Adebola, S. S., Yusoff, W. S. bin W., & Dahalan, J. (2011). An ARDL Approach To The Determinants of Non- Performing Loans in Islamic Banking System in Malaysia. Kuwait Chapter of Arabian Journal of Business and Management Review, 1(2), 20–30.

Adusei, C. (2018). Determinants of Non-Performing Loans in The Banking Sector of Ghana Between 1998 and 2013. Asian Development Policy Review, 6(3), 142–154. https://doi.org/10.18488/journal.107.2018.63.142.154.

Ahmad, N. H., &Ahmad, S. N. (2004). Key Factors Influencing Credit Risk of Islamic Bank: A Malaysian Case. The Journal of Muamalat and Islamic Finance Research, 1, 65–80.

Ahmad, N. H., & Ariff, M. (2007). Multi-Country Study of Bank Credit Risk Determinants. The International Journal of Banking and Finance, 5(1), 135–152.

Akbar, D. A. (2016). Inflasi, Gross Domestic Product (GDP), Capital Adequacy Ratio (CAR), dan Finance to Deposit Ratio (FDR) terhadap Non Performing Financing (NPF) pada Bank Umum Syariah di Indonesia. I-Economic, 2(2), 19–37.

Asnaini, S. W. (2014). Fakor-Faktor Yang Mempengaruhi Non Performing Financing (NPF) pada Bank Umum Syariah di Indonesia. Jurnal Tekun, 5(2), 264–280.

Barus, A. C., & Erick. (2016). Analisis Faktor-Faktor Yang Mempengaruhi Non Performing Loan pada PT. Bank Mandiri (PERSERO). Jurnal Wira Ekonomi Mikroskil, 6(2), 113–122.

Berger, A. N., & DeYoung, R. (1997). Problem Loans and Cost Efficiency in Commercial Banks. Journal of Banking & Finance, 21, 849–870. https://doi.org/10.17016/feds.1997.08.

Chabachib, M., Windriya,A., Robiyanto, R., & Hersugondo, H. (2019).A Comparative study of Indonesian and Malaysian Islamic banks. Banks and Bank Systems, 14(4), 55–68. https://doi.org/10.21511/bbs.14(4).2019.06.

Choirudin, A. (2017). Analisis Faktor Yang Mempengaruhi Pembiayaan Bagi Hasil Mudharabah Pada Bank Umum Syariah. Jurnal Ilmu Dan Riset Akuntansi, 6(9), 1–22.

Çifter, A. (2015). Bank concentration and non-performing loans in Central and Eastern European countries. Journal of Business Economics and Management, 16(1), 117–137. https://doi.org/10.3846/16111699.2012.720590.

Effendi, J., Thiarany, U., & Nursyamsiah, T. (2017). Factors Influencing NPF (NPF) at Islamic Banking. Walisongo: Jurnal Penelitian Sosial Keagamaan, 25(1), 109–138. https://doi.org/10.21580/ws.25.1.1540.

Farooq, M. O., Sayed, M., Elseoud, A., Turen, S., & Abdulla, M. (2019). Entrepreneurship and Sustainability Issues Causes of Non-Performing Loans: the Experience of Gulf Cooperation Council Countries. 6(4), 1955–1974. http://jssidoi.org/jesi/http://doi.org/10.9770/jesi.2019.6.4%0Ahttp://jssidoi.org/esc /homehttp://doi.org/10.9770/jesi.2019.6.4.

Ekanayake, E., & Azeez, A. (2015). Determinants of Non-Performing Loans in Licensed Commercial Banks: Evidence From Sri Lanka. Asian Economic and Financial Review, 5, 868-882.

Firmansyah, I. (2014). Determinant of Non Performing Loan: The Case of Islamic Bank in Indonesia. Buletin Ekonomi Moneter Dan Perbankan, 17(2), 241–258.

Havidz, S. A. H., & Setiawan, C. (2015). Bank Efficiency and NPF in The Indonesian Islamic Banks. Asian Journal of Economic Modelling, 3(3), 61–79. https://doi.org/10.18488/journal.8/2015.3.3/

Jabbouri, I., & Naili, M. (2019). Determinants of Nonperforming Loans in Emerging Markets: Evidence from the MENA Region. Review of Pacific Basin Financial Markets and Policies, 22(4), 33. https://doi.org/10.1142/S0219091519500267.

Karim, M. Z., Chan, S. G., & Hassan, S. (2010). Bank Efficiency and Non-Performing Loans: Evidence From Malaysia and Singapore. Prague Economic Papers, (2), 118–132. https://doi.org/10.18267/j.pep.367.

Khan, M. A., Siddique, A., & Sarwar, Z. (2020). Determinants of Non-performing Loans in The Banking Sector in Developing State. Asian Journal of Accounting Research, 5, 135-145.

Kusnianingrum, D., & Riduwan, A. (2016). Determinan Pembiayaan Murabahah (Studi Pada Bank Syariah Mandiri). Jurnal Ilmu Dan Riset Akuntansi, 5(1), 1–19.

Messai, A. S., & Jouini, F. (2013). Micro and Macro Determinants of Non-performing Loans. International Journal of Economics and Financial Issues, 3, 852-860.

Mokhtar, M., Smith, P., & Wolf, S. (2005). Measurement and Management of Non-Performing Loans in Malaysian Islamic Banks: An Analysis. Islamic Financial Architecture: Risk Management and Financial Stability, 313. Jeddah: Islamic Research and Training Institute.

Mutamimah, & Chasanah, S. N. Z. (2012).Analisis Eksternal dan Internal Dalam Menentukan Non Performing Financing Bank Umum Syariah di Indonesia. Jurnal Bisnis Dan Ekonomi (JBE), 19(1), 49–64.

Nasution, M. E., & Wiliasih, R. (2007). Profit Sharing dan Moral Hazard Dalam Penyaluran Dana Pihak Ketiga Bank Umum Syariah di Indonesia. Jurnal Ekonomi Dan Pembangunan Indonesia, 8(2), 231–255.

Otoritas Jasa Keuangan. (2021). Statistik Perbankan Syariah.

Poetry, Z. D., & Sanrego, Y. D. (2011). Pengaruh Variabel Makro Dan Mikro Terhadap NPL Perbankan Konvensional dan NPF Perbankan Syariah. Tazkia Islamic Finance & Business Review, 6(2), 79–104.

Popita, M. S. A. (2013). Analisis Penyebab Terjadinya Non Performing Financing pada Bank Umum Syariah di Indonesia. Accounting Analysis Journal, 2(1), 1–10.

Prastanto. (2013). Faktor Yang Mempengaruhi Pembiayaan Murabahah Pada Bank Umum Syariah di Indonesia. Accounting Analysis Journal, 2(1), 1–4.

Rachman, R. A., Kadarusman, Y. B., Anggriono, K., & Setiadi, R. (2018). Bank-specific Factors Affecting Non-performing Loans in Developing Countries: Case Study of Indonesia. Journal of Asian Finance, Economics and Business, 5(2), 35–42. https://doi.org/10.13106/jafeb.2018.vol5.no2.35.

Rahman, A. F., & Rochmanika, R. (2012). Pengaruh Pembiayaan Jual Beli, Pembiayaan Bagi Hasil, dan Rasio Non Performing Financing terhadap Profitabilitas Bank Umum Syariah di Indonesia. Iqtishoduna, 8(1). https://doi.org/10.18860/iq.v0i0.1768.

Rajha, K. S. (2016). Determinants of Non-Performing Loans: Evidence from the Jordanian Banking Sector. Journal of Finance and Bank Management, 4, 125-136.

Ratnawati, A. T. (2012). Analisis Faktor-Faktor yang Mempengaruhi Keberadaan Komite Manajemen Risiko (Risk Management Commitee) (Studi Empiris Pada Perusahaan Non Perbankan yang Listing di BEI). Media Ekonomi Dan Manajemen, 26(2), 66–78.

Rimadhani, M., & Erza, O. (2011). Analisis Variabel-Variabel yang Mempengaruhi Pembiayaan Murabahah Pada Bank Syariah Mandiri Periode 2008.01 - 2011.12. Media Ekonomi, 19(1), 27–52.

Setiawan, C. H., Hassan, M. K., & Mohamad, S. (2017). Non-Performing Loans and Bank Efficiency of Conventional and Islamic Banks in the Organization of Islamic Cooperation (OIC) Countries. Journal of Islamic Economics, Banking and Finance, 13(4), 19–44. https://doi.org/10.12816/0051000.

Škarica, B. (2014). Determinants of Non-performing Loans in Central and Eastern European Countries. Financial Theory and Practice, 38(1), 37–59.https://doi.org/10.3326/fintp.38.1.2.

Sukmana, R. (2015). Determinants of Non Performing Financing in Indonesian Islamic Banks. Working Papers 1436-3, The Islamic Research and Teaching Institute (IRTI).

Szarowska, I. (2018). Effect of Macroeconomic Determinants on Non-performing Loans in Central and Eastern European Countries. International Journal Monetary Economics and Finance, 11(1), 13–14.

The ASEAN Post Team. (2020). Islamic finance in Southeast Asia. The ASEAN Post. https://theaseanpost.com/article/islamic-finance-southeast-asia-0.

Wahyu, D. R. (2016). Financing to Deposit Ratio (FDR) Sebagai Salah Satu Penilaian Kesehatan Bank Umum Syariah (Study Kasus Pada Bank BJB Syariah Cabang Serang). Jurnal Ekonomi Keuangan Dan Bisnis Islam, 7(1), 19–36.

DOI: https://doi.org/10.18326/muqtasid.v13i1.77-94


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.


Creative Commons License

MUQTASID by http://muqtasid.iainsalatiga.ac.id/ is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

MUQTASID Jurnal Ekonomi dan Perbankan Syariah UIN SALATIGA p-ISSN: 2087-7013, e-ISSN: 2527-8304