The Influence of Credit Interest Rate and Credit Risk on Market Performance

This study aims to analyze the effect of credit interest rates and credit risk on market performance. Non Performing Loans (NPL) reflect bank credit risk, where the higher the NPL level, the greater the credit risk borne by the financing party. Due to high NPLs, financing will be more careful (selective) in channeling credit. This is due to the potential for uncollectible credit. The high NPL will increase the risk premium, which will lead to higher loan interest rates. Credit interest rates that are too high will reduce public demand for credit. The high NPL also resulted in the emergence of larger reserves, so that in the end bank capital was also eroded. Thus, the amount of NPL is one of the obstacles to the channeling of financing credit. The research method used is quantitative research. The sampling technique used was purposive sampling. The study was conducted on finance companies with a research period of 2015-2018. The analytical method used is the multiple regression test using SPSS.22 analysis tools, namely with a descriptive test, a classic assumption test, a model suitability test, and a regression test. The results of credit interest rates have no significant effect on market performance, and credit risk has a significant effect on market performance. This shows the interest of inventors to invest in shares of companies whose non-performing loans are not high even though the interest rates on these companies increase.