ABSTRACT
The purpose of this study is to analyze the effect of macroeconomic variables and bank-specific variables to non-performing loans in the banking industry in Indonesia. The data used in this study is quarterly secondary data from 2015:01-2017:04 across 106 commercial banks. The analysis used is dynamic Generalized Method-of-Moment (GMM). The result of this research is that real Gross Domestic Product (GDP) growth, Return on Asset (ROA) and efficiency (BOPO) have a positive impact on the NPL. Inflation and Return on Equity (ROE) have a negative impact on the NPL and interest rate has no effect on the NPL. The Sargan test failure to reject the null hypothesis. It implies that the instruments are valid and the serial correlation test for the second order is higher than alpha by 5%, which means the model has no autocorrelation.
