This study aimed to investigate the determinants of non-performing loans (NPLs) using a case of the Non-Bank Financial Intermediaries (NBFIs) in Malaysia during the period from 2009 to 2018. The study revealed that the level of NPLs can be attributed to both NBFI-specific factors (internal factors) and macroeconomic factors. The assessments on panel data analysis were done using STATA software. The results show that NBFI size, Profit (ROA), Lending Interest Rate (IR), and Inflation (INF) have a significant positive relationship with NPLs. The findings reveal that NPLs tend to increase with the deteriorating bank’s efficiency. The larger the NBFI size, higher profit, and high interest contribute to the increment of NPLs. Meanwhile, NPL also increases due to the change in economic condition, particularly with a rise in inflation rate. Hence, for NBFIs to decrease their NPLs, they should consider these factors during the lending process.
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