Banking sector is one of the most important driver for the economic progress of
Indonesia. From all banks in Indonesia, there are 10 banks that play more significant
role than the others. Recently however, the Indonesian banking sector is faced with the
threat of non-performing loans. This threat is particularly dangerous for the major
Indonesian banks, since if they were unable to overcome this threat, it might affect the
whole Indonesian economy. Therefore, this research was meant to find out which
internal and external factors have the most significant effect towards non-performing
loans rate of the major Indonesian banks.
The data-processing method used in this research was done by reliability and
classic assumption test, as for the analysis-data method is using multiple linear
regression towards the secondary data collected from several external sources. The
research result shows that only two variables, namely capital adequacy ratio and
economic growth are significantly influencing the non-performing loans rate of major
Indonesian banks during 2010-2014.