ABSTRACT
The main aim of this study was to find out the effect of macro-economic factors (GDP, Inflation, and Exchange rate) and bank specific factors (Bank size, level of capital, ROA, CAR and NLIR) on the NPL of banks in Indonesia and Nepal. This study used regression analysis to determine the effect of the independent variables consisting of macro-economic factors and bank specific factors. Based on the analysis results, there are three variables (GDP, bank size and NLIR) that have a significant effect on the NPL of Indonesian banks. The variables of GDP and inflation also have a significant effect on the NPL of Nepali banks. In both countries, GDP has a negative and significant effect on NPL but only inflation has a negative and significant effect on NPL only in Nepal. The change in GDP affects both countries but for inflation, banks in Nepal were not affected.
