Abstract

Recently, interest rates and non-performing loans have been the most critical factors in gauging bank performance, and academics must pay attention to this. Consequently, this study investigates the long- and short-term effects of loan interest rates and non-performing loans (NPLs) on performance as measured by return on assets (ROA) and return on equity (ROE). This study utilizes secondary data from the financial accounts of ten Indonesian rural banks from 2014 to 2020. The data is analyzed using Moments-Quantile-Regression Methods (MMQR). The survey results indicated three things. The first is that credit interest rates affect performance positively and considerably. The second fact demonstrates that loan interest rates have a favorable and substantial effect on performance. The third demonstrates that NPLs significantly and negatively impact banking performance. The study instructs banks on managing and establishing loan interest rates. In addition, the study suggests that Indonesian rural banks will continue to enhance their financial performance, profitability, and liquidity. This study also facilitates improved future decision-making and planning.