The Effect of Lending Interest Rates and Non-Performing Loans on Credit Demand of Micro, Small, And Medium Enterprises (MSMEs) in Central Sulawesi Province

Abstrak

The development of the Micro, Small, and Medium Enterprises (MSMEs) sector in Central Sulawesi Province is strategic in supporting regional economic growth. However, MSME credit demand in this region still faces significant challenges, particularly regarding access to financing, which is influenced by lending interest rates and the level of non-performing loans. This study aims to analyze the effect of MSME lending interest rates and MSME non-performing loans on MSME credit demand in Central Sulawesi Province, both simultaneously and partially, during the period from the first quarter of 2016 to the fourth quarter of 2023. The data used are quantitative secondary data in the form of quarterly time series sourced from Bank Indonesia Central Sulawesi Province, analyzed using multiple linear regression with a semi-log model. The results show that MSME lending interest rates and MSME non-performing loans simultaneously have a significant effect on MSME credit demand. Partially, the MSME lending interest rate has a negative and significant effect on MSME credit demand, as does MSME non-performing loans on MSME credit demand. These findings emphasize the importance of affordable interest rate adjustments and appropriate credit risk management to expand MSME financing access.