The macroeconomic determinants of non-performing loans across Asian countries / Nur Izzatul Afifah Abdul Wahab

The purpose of this research is to identify the macroeconomic determinants of nonperforming loans (NPL) across Asian countries; Indonesia, Korea, Malaysia, Philippines and Thailand. NPL is a continuing issue that every country concerns. If the NPL problem is not well-managed, it would lead to cost inefficiency, bank failure or even financial crisis. This study is essential to outline the determinants that might give impact to NPLs. This study is conducted using panel data collected from 1998 until 2016. The independent variables of this study are gross domestic product, unemployment, inflation, real interest rate, exchange rate and lending interest rate. The data is analyzed using Ordinary Least Square (OLS). The result shows that lending interest rate and exchange rate have significant relationship towards NPL in Asian countries. For diagnostic checking, a number of tests were run to examine the problems in the regression model formed. As a result, the data set is found to be not normally distributed and the problems of heteroscedasticity as well as autocorrelation are being detected.