THE PERFORMANCE OF HIGH RESOLUTION NEUTRON POWDER DIFFRACTOMETE

Introduction

The financial crisis is one of the most pressing and important issues for the banking sector globally. Most banks in Indonesia still use loans as the main income to finance their operations. Not all loans that are disbursed are risk-free, some loans have considerable risks and can threaten the health of the bank. In the lending business, banks are faced with defaults by loan borrowers who produce NPLs. Non-Performing Loans (NPL) create problems for the balance sheet of the banking sector on the asset side and negatively impact the income statement as a result of the provision of loan losses. The International Monetary Fund (IMF) states that loans will be considered NPLs if they do not generate interest and principal amounts for a minimum of 90 days. The main reasons for high NPL are weak credit procedures, low-skilled credit specialists, high markup spreads, low credit principles and a lack of borrower monitoring policies. Non-Performing Loans (NPLs) are a leading indicator for measuring credit risk affecting a country's banking system. (Khan et al., 2020) stressed that NPL can be used as an indicator of the banking crisis as it affects the nation's economic growth by reducing credit development (Ivanović, 2016). A low NPL level indicates a strong monetary system while a high NPL indicates a weak financial position. The increasing NPL shift will affect banking efficiency resulting in the banking crisis (Vouldis & Louzis, 2018). Non-Performing Loans (NPLs) will block interest income, reduce investment openings and develop liquidity crises in the financial system, resulting in bankruptcy problems and a weak economic system. Thus, it is necessary to identify the factors that affect NPL and lower NPL levels for financial stability and economic objectives. Non-Performing Loans (NPLs) affect the overall routine of the banking sector, thus threatening the bankruptcy of the banking sector. High NPL levels directly affect the bank's overall financial performance (Khan et al., 2020).

Based on the background described above and previous research conducted by (Khan et al., 2020) in Pakistan in 2020 shows the influence of Return on Assets (ROA), Income Diversification, Bank Capital and Bank Efficiency on Non-Performing Loans (NPL), researchers are interested in re-researching in Indonesia. Therefore, this study is titled " Factors Affecting Non-Performing Loans of Conventional Banking: Evidence in Indonesia Stock Exchange"

1. Non-Performing Loans

Non-Performing Loans (NPLs) are financial ratios related to credit risk. Credit risk is the risk of possible bank losses as a result of not repaid credit given by the bank to debtors (Kusaly et al., 2017).

Persistently high NPL levels limit credit and economic activity in the region and increase banks' vulnerability to shocks. High NPLs have a negative impact on a bank's profitability, given that they require banks to increase the provision and usually do not generate revenue. High NPLs also increase banks' vulnerability to shocks by reducing their profitability, tying up their capital, and increasing funding costs. Thus, banks with high NPL present potential risks to financial stability in the region (Canetti et al., 2017).

One of the things that banks face is the risk of unpaid credit that has been given or referred to as credit risk. Credit risk or default risk usually arises from various credits that fall into the category of Non-Performing Loans (NPL). According to the International Monetary Fund (IMF), loans can achieve NPL status in several ways, including: Principal and interest loan installments are at least 90 days due, and lenders no longer believe borrowers will comply with their debt obligations. In this case, the loan is written as bad debt in the lender's account book.

a. Interest payments for 90 days are capitalized, refinanced, or delayed due to changes in the loan agreement.

b. Principal and interest payments are less than 90 days late, and there's reason to doubt that borrowers won't pay the unpaid loan in full.

Based on the Regulation of the Otoritas Jasa Keuangan No. 3 Article 4 of 2018 the Bank under intensive supervision as referred to in Article 3 is stipulated by OJK for at least 1 (one) year from the date of the OJK notification letter. The period of intensive supervision as referred to in paragraph (1) can be extended by OJK at most 1 (one) time and a maximum of 1 (one) year only for Banks in intensive supervision that meet the criteria of one of which is the ratio of net non-problematic credit (net NPL) or net problem financing ratio (NPF net) of more than 5% (five per cent) of total credit or total financing,� And the solution is complex. If the bank's NPL is more than 5% it will affect the level of health of the bank. If banks can reduce the NPL ratio to below 5%, then the potential profit obtained will be even greater, because banks save the necessary things to form a reserve of problematic credit losses or The Elimination of Productive Assets Allowance (PPAP).

2. Return on Assets

Bank profitability is the ability of a company in seeking profit or profit of a certain period (Rohmiati et al., 2019). To measure the level of profit of a bank, a profit ratio or profitability ratio is used. Analysis of ROA can be projected into the future to see the company's ability to generate profits against future assets. Return on Assets (ROA) to analyze or measure the level of business efficiency and profitability achieved (Rusnaini & Ariyanto, 2019). Return on Assets (ROA) is an indicator of managerial efficiency that indicates management's ability to manage its assets for profit.

Return on Assets (ROA) provides information about the amount of income returned in return for any money invested in the form of assets. Return on Assets (ROA) indicates a business's capacity to generate profits using its assets. In some sectors, ROA is larger than others because the amount of capital invested in assets varies. Businesses that make products will often spend a lot of money on infrastructure and equipment.� A company's operational efficiency is affected by the use of resources, which is seen in net profit margins. Success and failure are not always associated with high and low-profit margins. A business may have low margins but still, manage to create a high return on investment and assets.� Return on Assets (ROA) adalah ukuran yang berguna untuk mengukur total profitabilitas dan efisiensi operasional bisnis karena menunjukkan bagaimana profitabilitas dan aktivitas operasional berinteraksi. Konsep ini berpendapat bahwa meningkatkan laba atas investasi, atau laba atas modal, baik dengan memperluas volume penjualan atau meningkatkan margin keuntungan, akan meningkatkan kinerja perusahaan (Panigrahi, 2021).

The relationship between NPL and Return on Assets (ROA) is that the lower the ROA level, the higher the NPL, and vice versa (Khan et al., 2020). (Messai & Jouini, 2013) �confirmed from his research that there is a negative relationship between ROA and NPL. As the ROA decreases, banks begin to invest in high-risk projects, and as a result, NPL levels increase. (Ghosh, 2015) indicates that there is a negative affiliation between ROA and NPL. (Dimitrios et al., 2016) investigated the various determinants of NPL in the euro banking system and concluded that ROA has a significant impact on NPLs. Based on previous arguments, we consider that:

H1. Return on Assets has a negative influence on Non-Performing Loans.

3. Income Diversification

Income diversification is a bank's strategy to obtain income not only from one source but several sources. Interest income is the main income of banking from traditional activities, namely lending, while in diversifying banking income looking for other new sources of income that are expected to be more stable, namely non-interest income (Widiasari & Pangestuti, 2015).

Income diversification is non-interest income calculated by the remainder of the proportion of interest income difference and non-interest income to total operating income (Sianipar, 2015).

Revenue diversification is seen from an economic point of view, as an effort made by companies to minimize corporate risks to economic uncertainty. Revenue diversification is also considered a breakthrough for companies to benefit by utilizing their resources. Diversification itself is a form of business development by expanding existing market share or developing various products (Ayu Dian Aprilia, 2019).

According to Ashyari and Rokhim 2020, revenue diversification refers to the company's plan to expand its non-interest income so that the company's income does not only focus on traditional income, i.e. interest income. Diversification is a way to sustain risk and also reduce financial difficulties. Non-interest income can improve a bank's profitability and income stability, and another verifiable benefit is reducing a bank's credit risk.

Several studies have focused on examining the effect of investment diversification on non-performing loans . has researched what affects income diversification in the banking sector. These banks have better credit performance which indicates an inverse relationship between NPL and income diversification (Rachman et al., 2018). Showed that various banking factors that affect NPL in Indonesia include income diversification, bank capital, and other banking factors. Based on previous arguments, we consider that:

H2. Income diversification has a negative influence on non-performing loans.

4. Bank Capital

A bank's capital adequacy ratio is used to maintain and defuse financial risk. Under the supervision of bank capital, a bank's capital adequacy ratio affects the number of loans and the structure of loans, and the lack of bank liquidity will not only lead to individual liquidity risk of banks but also the rupture of systemic banking risks. Measuring the impact of bank capital levels on loan size is one of the most basic issues for verifying the relationship between the financial sector and the real economy and has been more concerned, but research into the impact of liquidity on loan size changes is relatively lacking.

Capital Adequacy Ratio (CAR) shows the adequacy of capital owned by banks to support assets that contain risk, such as credit provided (Damayanti & Savitri, 2018)� .� Capital Adequacy Ratio (CAR) is a ratio that shows how far all bank assets that contain risk (credit, participation, securities, bills to other banks) are financed from their capital funds in addition to obtaining funds from sources outside the bank (Astrini et al., 2018). The higher the CAR, the better the bank's ability to bear the risk of any risky productive credit/ asset. If the value of CAR is high, then the bank can finance operational activities and make a considerable contribution to profitability (Khan et al., 2020).

The Capital Adequacy Ratio (CAR) measures the health level of a bank. This ratio represents the organization's ability to withstand abnormal losses and also demonstrates the strength and stability of the organization in times of crisis. Companies must maintain a minimum CAR for their survival. The ratio of capital to risk-weighted assets or Risk-Weighted Assets (ATMR) is used for its measurement (Khan et al., 2020) �arguments, we consider that:

H3. Bank Capital has a negative influence on Non-Performing Loans

5. Bank Efficiency

In the banking sector, (Alber et al., 2019) stated that efficiency supports the success of macroeconomic policies implemented, which result in durable development, economic growth, and prosperity for society. The way to classify banking efficiency is distinguished between the two main types of banking efficiency first known as scale efficiency and first. Introduced by Farell which is the relationship between the average production cost per bank unit and volume, the second type being efficiency X and introduced by Leibenstein �and represents deviation from the cost-effective borders that describe the lowest products. at a cost for a certain level of output (Yudistira, 2004).

(Alber et al., 2019) stated that efficiency supports the success of macroeconomic policies implemented, resulting in durable development, economic growth, and well-being for society. The definition of bank efficiency remains debatable among researchers. To determine what constitutes the efficiency of a bank, one must first decide the nature of the banking approach.

According to (Ekanayake & Azeez, 2015) studied the factors affecting NPL in Sri Lanka's banking sector for the period between 1999 and 2012 and concluded that NPL had a negative correlation with bank size and bank efficiency (Benthem, 2017). examined the relationship between operating efficiency, capitalization, and NPL in commercial banks, and the results showed that operating efficiency increased higher NPL levels, which proposed that management behavior affects NPLs. (Rachman et al., 2018) state that operating efficiency does not affect NPL. So we propose that:

H4. Bank Efficiency has a negative influence on Non-Performing Loans.

Method

In this study, the authors used quantitative methods (Unaradjan, 2019). The study is based on panel data covering thirty-five conventional banks listed on the Indonesia Stock Exchange. The variables used in the model are calculated using the original data, the data used is secondary in the form of the annual financial statements of thirty-five Indonesian state-owned commercial banks listed on the Indonesia Stock Exchange in the period 2016-2020. The analysis method in this study uses a regression data panel with its analysis tool, IBM SPSS 25 software (Juliandi et al., 2018).

This study is based on data from a panel of conventional state-owned banks in Indonesia using purposive sampling, which is a sampling method by determining certain criteria. The banking population listed on the Indonesia Stock Exchange is 43 banks. Based on the large banking population, which serves as a research analysis unit from 2016 to 2020, which is 35 banks.

The use of panel data is the most suitable tool when the sample is amplified by cross-sectional and time-series data. �The panel's data helps in identifying bank-specific factors and unknown observational differences between each bank (Ghosh, 2015). In this study, we considered the Indonesian banking sector. Non-Performing Loans (NPLs) are considered dependent variables and are measured as NPL ratios, while profitability, income diversification, capital and operating efficiency are considered independent variables.

Table 6

Descriptive statistics

Variables	Observation	Min
NPL	175	0.0020
ROA	175	-0.0747
CAR	175	0.0153
DIV	175	0.0169
EF	175	0.0029

Source: IBM SPSS 25

Table 7

Descriptive statistics

Variables	Observation	Min
NPL	175	0.1575
ROA	175	0.1589
CAR	175	14.5300
DIV	175	0.8608
EF	175	1.1931

Source: IBM SPSS 25

Table 8

Descriptive statistics

Variables	Observation	Min
NPL	175	0.0338
ROA	175	0.0171
CAR	175	0.4022
DIV	175	0.2178
EF	175	0.0856

Source: IBM SPSS 25

Table 9

Descriptive statistics

Variables	Observation	Min
NPL	175	0.0212
ROA	175	0.0254
CAR	175	1.5308
DIV	175	0.1420
EF	175	0.1404

Source: IBM SPSS 25

Based on the T Test in the table above, the results can be spelled out as follows:

1. Return on Assets showing a significance value of 0.030 < 0.05 with a coefficient of -0.515. That is, Return on Assets negatively and significantly affects Non-Performing Loans.

2. Capital Adequacy Ratio shows a significance value of 0.019 < 0.05 with a coefficient of -0.004. That is, the Capital Adequacy Ratio has a negative and significant influence on Non-Performing Loans.

3. Income Diversification shows a significance value of 0.055 > 0.05 with a coefficient of 0.045. That is, Income Diversification does not influence Non-Performing Loans.

4. Bank Efficiency shows a significance value of 0.038 < 0.05 with a coefficient of -0.001. That is, Bank Efficiency has a negative and significant effect on Non-Performing Loans.

B. Discussion

Based on hypothesis testing with the T Test, the influence of each independent variable on the dependent variable can be interpreted as follows:

1. Return on Assets

Based on hypothesis tests obtained in this study, it can be known that Return on Assets has a negative influence on Non-Performing Loans. This can be interpreted that the small amount of profit seen from the total assets will affect the risk of banking credit. The results of this study are in line with research conducted by (Khan et al., 2020) that the relationship between NPL and ROA is the lower the level of ROA, the higher the NPL and vice versa (Khan et al., 2020), (Anwar & Sunaenah, 2016) confirmed from his research that there is a negative relationship between ROA and NPL. As the ROA decreases, banks begin to invest in high-risk projects, and as a result, NPL levels increase. (Makri et al., 2014) indicate that there is a negative affiliation between ROA and NPL, while (Khan et al., 2020) states that there is a positive relationship between ROA and NPL. �(Dimitrios et al., 2016) investigated the various determinants of NPL in the euro banking system and concluded that ROA had a significant impact on NPL. This finding indicates that the larger the ROA of a bank, the greater the position of the bank in terms of asset use. Return on Assets (ROA) compares the value of a business asset with the profits it generates over a period of time. Return on Assets (ROA) is a tool used by companies to determine how effectively a company uses its resources to make a profit without pressuring the financial manager to make even more profit from its credit distribution. Thus leading to higher profitability has proven that banking financial managers can monitor the quality of credit channelled and manage problematic credit.

2. Income Diversification

Based on the hypothesis tests obtained in this study, it can be known that Income Diversification does not influence Non-Performing Loans. This can be interpreted that a large amount of income diversification will not affect the credit risk of banking. The results of this study are in line with research conducted by (Prawira & Wiryono, 2020) �which states that there is no relationship between income diversification and NPL levels (Kurniawan & Siswanto, 2021). stated that income diversification does not correlate with NPL. The level of income diversification does not affect the increase or decrease in the bank's performance in maintaining risk and also reduces financial difficulties. This sulks at the descriptive statistical results in this study which has an average income diversification of 21.78% and a maximum value of 86.07%. This indicates that banks that have a high-income diversification value can be said to be able to attract depositors to keep their money in the bank so that it can be an acceptance that if more and more can increase loans to debtors without increasing the number of problematic loans.

3. Bank Capital

Based on hypothesis tests obtained in this study, it can be known that the Capital Adequacy Ratio has a negative influence on Non-Performing Loans. This can be interpreted that the high capital adequacy ratio being used to maintain and relieve financial risk, one of which is the risk of debtor default. The bank's capital effect on the NPL is in the opposite direction. On the one hand, incentives and encouraging low-capital bank managers tend to engage in high-risk investments and provide loans issued without proper credit ratings and monitoring.� The results of this study are in line with the research of (Siswanto et al., 2019).� The state that the increase in loan defaults occurred indicates a negative relationship between bank capital and NPL. Based on research conducted by (El-Maude et al., 2017), it was found that CAR has a negative effect on the ups and downs of NPL. The results of this study are in line with research conducted by (Dewi & Suhartono, 2021) which showed a negative correlation between CAR and NPL. In addition, �(Khan et al., 2020) stated that regarding banking factors, NPL and CAR have a negative relationship in the banking sector. These findings indicate that the capital held by the bank can bear all productive assets that contain risk, such as credit risk. Higher capital adequacy can reduce the risk level of debtor default. Banks that have a higher capital adequacy ratio indicate the existence of better credit management so that the bank is able to minimize the risk of default.

4. Bank Efficiency

Based on the hypothesis tests obtained in this study, it can be known that Bank Efficiency has a negative influence on Non-Performing Loans.� This can be interpreted that the high level of efficiency in banks can reduce the risk of default on bank loans. The results of this study are in line with the research (Khan et al., 2020) which states that a decrease in the cost efficiency of commercial banks will affect the small risk of future default. This is faced by managers who are unable to control the operational and management costs of the loan portfolio. (Kurniawan & Siswanto, 2021) examined the relationship between operational efficiency, capitalization, and NPL in commercial banks, the results showed that operational efficiency suppressed higher NPL levels. (Ekanayake & Azeez, 2015) �studied the factors affecting NPL in Sri Lanka's banking sector for the period between 1999 and 2012 and concluded that NPL had a negative correlation with bank size and bank efficiency. There is a correlation between NPL levels in private banks and their banking factors such as capitalization, bank efficiency, and profitability. The findings suggest that bank efficiency leads to low NPL levels, suggesting that management influences NPL levels. (Benthem, 2017) examined the relationship between operating efficiency, capitalization, and NPL in commercial banks, and the results showed that operating efficiency increased higher NPL levels, which proposed that management behaviour affect NPLs. This finding indicates that at a time when the bank's efficiency level increases, the bank will pressure its financial managers into making even more profit through the distribution of its credit because the bank is doing all its business activities at a relatively low cost, it can be said that the bank efficiently does its job.

Conclusions

This research was conducted to analyze the influence between Return on Assets (ROA), Income Diversification, Bank Capital as measured by Capital Adequacy Ratio (CAR), and Bank Efficiency on Non-Performing Loans (NPL) on banking sector companies listed on the Indonesia Stock Exchange (IDX) with a sample number of 35 companies in 2016-2020. The conclusions of the results of the study that can be taken are as follows Return on Assets, Bank Capital, and Bank Efficiency have a negative influence on Non-Performing Loans while Income Diversification does not influence Non-Performing Loans.

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Jurnal Syntax Transformation	Vol. 3, No. 1, Januari 2022
p-ISSN : 2721-3854 e-ISSN : 2721-2769	Sosial Sains

Kolmogorov - Smirnov
Unstandardized Residual	Sig.
	0.190

Independent Variables	Collinearity Tolerance	VIF	Conclusion
ROA	0.967	1.035	Non-Multicollinearity
CAR	0.976	1.024	Non-Multicollinearity
DIV	0.766	1.306	Non-Multicollinearity
EF	0.762	1.312	Non-Multicollinearity

Independent Variables	Sig.	Conclusion
ROA	0.181	Non-Heteroscedasticity
CAR	0.260	Non-Heteroscedasticity
DIV	0.659	Non-Heteroscedasticity
EF	0.309	Non-Heteroscedasticity

F-statistics	A	Description
3.472	0.05	H0 rejected

Variables	Measurements	Symbol
Independent Variables
Return on Assets	Net income to total assets	ROA
Bank Capital (Capital Adequacy Ratio)	Capital divided by risk weighted asset	CAR
Income Diversification	Noninterest income divided by total income	DIV
Bank Efficiency	Noninterest expense divided by noninterest income.	EF
Dependent Variables
Non-Performing Loans	NPLs to total loans	NPL

Independent Variables	Dependent Variable
	Non-Performing Loans
	Coefficient	Sig.	Conclusion
Constanta	0.24
ROA	-0.515	0.030	Significant Negative
CAR	-0.004	0.019	Significant Negative
DIV	0.045	0.055	Has No Effect
EF	-0.001	0.038	Significant Negative