The Influence of Inflation, Gross Regional Domestic Product, Unemployment, And Income Inequality on Non-Performing Loans of Commercial Banks in 33 Provinces of Indonesia for the Period 2013-2024

This study aims to analyze the influence of macroeconomic factors on Non-Performing Loans (NPL) of commercial banks in 33 provinces of Indonesia during the 2013-2024 period. The independent variables used include inflation, Regional Gross Domestic Product (RGDP), open unemployment rate, and income inequality proxied by the Gini coefficient. The analytical method used is panel data regression with the Common Effect Model, Fixed Effect Model, and Random Effect Model approaches. The best model selection was conducted through the Chow Test, Hausman Test, and Lagrange Multiplier Test. The test results indicate that the Random Effect Model is the most suitable. Partially, the open unemployment rate has a positive and significant influence on NPL, while inflation, RGDP growth, and the Gini coefficient do not show a significant influence. However, simultaneously, all independent variables have a significant influence on NPL, indicating that non-performing loans are a phenomenon influenced by the interaction of various macroeconomic factors. These findings confirm the role of labor market conditions as a key indicator of credit risk at the regional level. Practically, the results of this study provide important implications for regulators and the banking sector in formulating more contextual and regionally-based credit risk management policies.