The Impact of Non-Performing Loans (NPL) on Credit Distribution of Conventional Banking Sector in Indonesia (2018-2022)

Abstrak

This study aims to assess the impact of Non-Performing Loans (NPL) on the credit distribution of conventional banks in Indonesia from 2018 to 2022. A quantitative approach with descriptive verification was employed. Data was collected using a documentation technique based on Indonesia Banking Statistics (SPI), incorporating monthly NPL rates and a dummy variable for the COVID-19 pandemic period. Purposive sampling was used to gather a sample of monthly data from conventional banks over the specified period, totaling 60 observations. The findings indicate that the NPL ratio negatively affects credit distribution, significantly impacting consumption, investment, and working capital loans. Furthermore, the COVID-19 pandemic period moderates the effect of the NPL ratio on credit distribution, intensifying the negative impact.