MSMEs Credit Distribution and Non-performing Loan Towards Banking Companies Profit in Indonesia

Abstract

The problems raised in the present research was related to the effect of MSMEs credit distribution loan and Non-Performing Loan (NPL) credit towards the banking companies profit in Indonesia. The study was intended to examine and obtain empirical evidence on the effect included (1) MSMEs credit variable to NPL variable. (2) MSMEs credit variable distributed to profit variable. (3) NPL to the profit variable and (4) to determine the effect indirectly MSMEs credit variable to profit variable through NPL in banking companies which included the 15 largest credit banks of MSMEs in Indonesia. The study used secondary data sources and data types used as quantitative data. It was collected through documentation studies. The data analysis technique was applied Path Analysis on the software (SPSS). The hypothesis result testing was obtained that (1) the total amount of MSMEs credit had a significant positive effect on the banking company profit. (2) MSMEs credit positively significant to NPL of the banking company. (3) NPL had a significant negative effect on the company profit. (4) MSMEs credit could directly effect to profit and also indirectly affect the MSMEs credit could effect NPL as an intermediary variable then to variable profit. The direct coefficient value (0,301) was lower than the indirect coefficient (0,404). Therefore, it can be concluded that there was an indirect effect of MSMEs credit channeled to NPL as an intermediate variable then to profit variable. The expected contribution could be obtained from the results was to assist the management in the banking sector in credit management included micro, small and medium enterprises (MSMEs) as well as become a consideration for stakeholders of the banking sector in decision making