National Economic Stimulus Policy to Reduce Non-Performing Loan Risk on Msme Debtors Affected by Covid-19 Disturbing Banking Performance and National Financial System

Abstract

Purpose: This study aims to analyze the effectiveness of stimulus policies implemented by The Financial Services Authority (OJK) in response to the current pandemic, specifically in aiding MSME debtors impacted by Covid-19 and mitigating the occurrence of bad credit.   Method: The research adopts a normative approach combined with both statutory and empirical juridical methodologies to examine the implementation of stimulus policies by OJK, particularly focusing on the provisions outlined in POJK Number: 11/POJK.03/2020.   Results and conclusion: The findings reveal that the economic stimulus policy introduced by the government has the potential to assist MSME debtors adversely affected by Covid-19 and alleviate the burden of bad loans. The extension of credit restructuring until March 2022 provided by this policy is identified as a key factor in facilitating increased lending activities and fostering accelerated national economic growth.   Research implications: This study contributes to the understanding of the efficacy of stimulus measures in addressing economic challenges posed by the pandemic, particularly in the context of MSMEs. It underscores the importance of timely and targeted interventions in supporting vulnerable sectors and safeguarding financial stability.   Originality/value: By combining normative and empirical juridical approaches, this research offers a comprehensive analysis of the implementation of stimulus policies by OJK and their impact on MSME debtors. The identification of specific provisions, such as credit restructuring extensions, provides valuable insights for policymakers, financial regulators, and stakeholders involved in formulating effective economic recovery strategies.