Review of Integrative Business and Economics Research, Vol. 13, Issue 4 436 Copyright  2024 GMP Press and Printing ISSN: 2304-1013 (Online); 2304-1269 (CDROM); 2414-6722 (Print) Bank-specific, Industry-Specific, and Macroeconomic Determinants of Credit Risk: Empirical Evidence from the ASEAN5 Banking Sector Liberty S. Patiu* De La Salle University Vivian Eleazar De La Salle University ABSTRACT The study utilized three regression estimations in evaluating the impact of bank-specific and industry specific indicators, macroeconomic indicators, their combined impact, and the impact of the selected interaction terms on the ASEAN5 banks’ credit risk exposures. It employed aggregate available data that were extracted from the World Bank databases and bank supervisors. For all models, robust fixed effects estimation was utilized after performing diagnostic tests. Capital adequacy, profitability and interest rate spread negatively affect nonperforming loan ratios (NPL). This proves that as banks improve their capital adequacy and profitability, credit risk exposure decreases. However, NPL is directly sensitive to credit-to-deposit ratio, lending rates, inflation rate, and unemployment. As more deposits are allocated to loans, banks increased their lending rates due to higher inflation rate; hence, interest rate spread declined. As unemployment escalates, loan default arises, which exposes banks to credit risk. Mixed results were generated for the interaction terms used in the study. The full model that combined independent variables with interaction terms, insignificant interactions were found except for the impact of credit to deposit ratio and ROA on NPL ratio. Banks reduced their credit risk due to improved profitability, good asset portfolio, and their stringent implementation of regulatory policies. However, they must closely monitor their loan portfolio and other assets qualities, especially those related to the NPL recovery strategies after. Keywords: Credit risk, ASEAN5, bank-specific indicators, macroeconomic indicators. Received 25 October 2023 | Revised 22 January 2024 | Accepted 28 March 2024. 1. INTRODUCTION The Asian Financial Crisis provided structural imbalance in the financial system and highlighted the weaknesses among banks in the management of their operations. Likewise, the vulnerability of banks over the past three decades resulted in systemic risks from intermediation activities and overall business operations. Patiu (2006) reported that from 1997-2000, banks in Thailand and Indonesia recorded high NPL ratios, and they gradually improved in the succeeding years. Rosenkranz and Lee (2019) also noted significant NPL improvement after the crisis and mentioned that credit risk exposure in Asia can escalate due to the macroeconomic, global, and firm-specific factors. Managing credit and maintaining non-performing loans ratio at low levels are