The Comparison of Credit Risk and Its Factors in Conventional and Islamic Banks

Abstract

. The objective of this study is to compare loan/financing risk and the factors that influence it between conventional banks and Islamic banks in Indonesia from 2010 to 2018. The influencing factors in both banks are macroeconomics, bank specific, and corporate governance. The sampling technique was purposive sampling and there were 33 banks obtained as the samples consisting of 24 conventional banks and 9 Islamic banks. This study used Structural Equation modeling-Partial Least Square technique and independent sample t-test. The study results showed that GDP affect the increase in NPL and the decrease in NPF. Inflation has no influence on NPL and NPF. Efficiency affects the increase in NPL and NPF. Bank size has effect on the decline of NPL and NPF. Board of directors influence the increase in NPL, but having no effect on NPF. Independent commissioners affect the decline of NPL, but having no influence on NPF.