Factors affecting non performing loans in selected South East Asian countries / Nurul Fazreen Mat Zaid

Non-performing loans are loans that borrowers are no longer making payment on. Loans are considered as non-perform when borrowers has not make repayment over than 90 days from the date of agreement. Non-performing loans will be categorised as default and the loss will be absorbed by the banks. However, the loans will be categorised as re-performing if the borrowers start making payment after 90 days has passed. This is also might be one of risk that has to bear by the banks because once borrowers have stopped making payment, they will do it again after that. This paper will be focused on investigate the non-performing loans in selected South East Asian countries by testing the relationship of non-performing loans with factors such as unemployment rate, inflation rate, gross domestic product (GDP) and lending interest rate. Three countries from South East Asian region will be selected for this study which are Brunei Darussalam, Thailand and Indonesia. In addition, this study will chose 75 observations on quarterly basis for seven years period starting from 2010 to 2016. The sample data will be gathered from DataStream consists of three selected countries. Panel data regression analysis will be practised to analyse determinants of non-performing loans based on the secondary data gathered and E-views 9 software will be used in analysing the data. The expected findings for this study are unemployment rate, inflation rate and lending interest rate will have significant relationship with non-performing loans while gross domestic product has no significant relationship with non-performing loans.