The impact of external and internal determinants on the non-performing loan: study of commercial banks in Malaysia / Ahmad Shahmi Abdul Rani

Loans have an essential contribution towards expansion of economy. Nevertheless, there is a non-payment issue that gives a gigantic loss impact on banks. Since long the argument has been said that external determinants affect the non-performing loans and the existing study on external determinants suggests that both internal and external determinants do strongly influence them. So, this paper aims to examine the relationship between both internal and external determinants on the non-performing loan in the study of commercial banks in Malaysia. The selected dependent variable is nonperforming loans (NPLs) whereas independent variables consist of bank internal and external factors. The sample of this study is taken from selected eight commercial banks in Malaysia as listed in Bank Negara Malaysia and the data is collected for the period of nine years from year 2007 to 2015. Thus, the total number observations are 72. This study use panel data approach to analyse the relationship between external and internal determinants on nonperforming loan in selected commercial bank in Malaysia. Panel Data Analysis is used in this study to identify the significant relationship between independent and dependent variable.