The implication of macroeconomic variables towards non-performing loan in Malaysia / Fatin Adlina Mohd Kamsah

This paper is primarily interested in examining the economic effect on the Malaysian non-performing loan from the year 2007 to 2017. A specific question that is addressed in this study is whether the macroeconomic variables affect the performance of non-performing loans. Hence, the independent variables that were chosen in this study are gross domestic product (GDP), tax revenue (TR), interest rate (IR) and foreign direct investment (FDI) while the performance of non-performing loans would be the dependent variable. This paper utilised the Ordinary Least Squares (OLS) regression method in determining the significance of the independent variables in causing the increasing number of non-performing loans. The correlation test, multicollinearity test, normality test and regression analysis were also employed in order to discover the properties of data collected from The World Bank and Trading Economics. Overall, the results have found that GDP, TR, IR and FDI have a significant relationship with the non-performing loan in Malaysia.. Thus, the finding assists the financial institutions to take actions on the number of non-performing loans.