GMM Panel Approach for Non-Performing Financial (NPF) Analysis at Indonesia's Sharia Commercial Bank

ABSTRACT : NPF is one of the most crucial financial indicators for sharia banking since it measures the extent of funding failure. Non-performing finance (NPF) occurs when a business partner is unable to fulfill their obligations. Better financing management by the bank is indicated by a lower NPF ratio value, and vice versa. The purpose of this study is to determine how the value of NPF Bank Umum Syariah in Indonesia is impacted by particular internal bank factors, such as the Capital Adequency Ratio (CAR), Finance Deposit Ratio (FDR), Operational Expense to Income Expense (OEOI), and macroeconomic variables, such as the Exchange Rate (ER) and Gold Prices (GP), between 2018 and 2023. The approach that is employed is the Generalized Method of Moment (GMM) with panel data analysis. According to the study's findings, NPF for one year before (NPFt-1), CAR, FDR, changes in OEOI, change in ER, and changes in GP are the factors that have the biggest effects on NPF. However, NPF is unaffected by OEOI, ER, GP, change in CAR, change in FDR.