<![CDATA[This study aimed to analyze the effects of the BI Rate, Production Index, exchange rate, and bank credit on nonperforming loans (NPLs) in the Indonesian banking sector from January 2020 to June 2025. A quantitative research approach was employed using the autoregressive distributed lag (ARDL) model to examine the short-run and long-run relationships among the variables. The study utilized monthly secondary data obtained from Bank Indonesia, the Financial Services Authority (OJK), and Statistics Indonesia (BPS). The findings revealed that, in the long run, the BI Rate and exchange rate had positive and statistically significant effects on NPLs, whereas the Production Index and bank credit did not exhibit statistically significant effects. In the short run, only certain variables demonstrated statistically significant relationships with NPLs. These findings suggested that monetary policy, particularly changes in the BI Rate, and exchange rate movements played important roles in determining bank loan quality in Indonesia. Meanwhile, the Production Index and bank credit were not identified as significant determinants of NPL fluctuations during the observation period. The study highlighted the importance of prudent credit risk management, particularly during periods of monetary tightening. Furthermore, the findings underscored the need for Bank Indonesia to consider the potential implications of higher policy interest rates for borrowers' repayment capacity and banking sector credit quality when formulating monetary policy.]]>
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