The Relationship between Non-Performing Loans and Size on Leverage in Indonesia Stock Exchange

https://doi.org/10.56225/ijfeb.v1i3.62

Authors

  • Yunus Anugerah Hulu Faculty of Economics and Business, Universitas Prima Indonesia
  • Cindy Cindy Faculty of Economics and Business, Universitas Prima Indonesia
  • Steward Gani Faculty of Economics and Business, Universitas Prima Indonesia
  • Mangasi Sinurat Sekolah Tinggi Ilmu Ekonomi Bina Karya Tebing Tinggi, Indonesia
  • Rico Nur Ilham Faculty of Economics and Business, Universitas Malikussaleh, Aceh, Indonesia

Keywords:

non-performing loan, size, leverage, commercial bank

Abstract

Today, the banking sector plays a vital role in achieving national goals for increasing the living standards of the community and supporting the running of the economy, considering its function as an intermediary institution, payment transaction, and transmission tool for monetary policy. Thus, this study seeks to examine the effect of Non-Performing Loan (NPL), Size (SIZE) on Leverage (LEV). Panel data regression is applied to achieve the proposed objective. The data collected from commercial bank companies listed on the Indonesia stock exchange (IDX) started from 2016 to 2019 with 43 banks. The result shows that NPL and SIZE positively and significantly affect LEV. In conclusion, this study has identified the relationship between Non-Performing Loans (NPL), Size (SIZE) and Leverage (LEV). Also, the studied variable indicated that NPL and SIZE significantly and positively affect LEV.

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Published

2022-09-30

How to Cite

Hulu, Y. A., Cindy, C., Gani, S., Sinurat, M., & Ilham, R. N. (2022). The Relationship between Non-Performing Loans and Size on Leverage in Indonesia Stock Exchange. International Journal of Finance, Economics and Business, 1(3), 231–236. https://doi.org/10.56225/ijfeb.v1i3.62

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