Pre- Pandemic Evidence from Conventional Banks in Malaysia on the Causes of Bank Specific Factors of Defaulting Loans

This article examines Malaysian commercial bank non-performing loan causes. This study examines bank and macroeconomic factors causing non-performing loans. Eight Malaysian commercial banks are used in this study. Data from 2009–2018 annual report and FitchConnect database. Panel data was used to analyze the data. All determinants were regressed against non-performing loans using STATA 14. This study found that capitalization negatively correlated with non-performing loans and the real effective exchange rate positively correlated. This report emphasizes key non-performing loan factors for banks and financial organizations. The real effective exchange rate, a novel macroeconomic variable, is crucial for non-performing loans in this study. Thus, this study adds a variable to the model to determine what causes non-performing loans.