Abstract
This study aims to investigate the impact of COVID-19 on the increase in bad credits at conventional commercial banks in Indonesia. The data used in this study are secondary data sourced from the Ministry of Health and from the Financial Services Authority (OJK), each of which consists of 50 data samples. The data analysis technique used in this study is simple regression analysis to determine the magnitude of the influence of COVID-19 on non-performing loans. The results of the data analysis show that COVID-19 has a significant effect on non-performing loans, and the COVID-19 variable can be used as an external indicator of the increase in non-performing loans for commercial banks in Indonesia. The implication of the research is that other researchers can make COVID-19 an external indicator of an emergency beyond human ability that can affect the level of non-performing loans. For banking, this study can be used as a reference when considering credit risk management policy during the COVID-19 pandemic. AcknowledgmentThe researchers are grateful to University of Sultan Ageng Tirtayasa for financial support. In addition, the authors sincerely apologize for the errors and mistakes found in this paper.
Highlights
This study aims to investigate the impact of COVID-19 on the increase in bad credits at conventional commercial banks in Indonesia
This study tried to find evidence as to whether the COVID-19 case is contributing to the rise in bad credit cases found in several conventional commercial banks in Indonesia
The results of the data analysis prove that it is true that the COVID-19 case has an impact on the increase in bad credit cases in several conventional commercial banks in Indonesia
Summary
Some even had to lay off their employees to reduce operational costs This systemic impact affects debtor’s ability in repaying loans originated from bank credit. The COVID-19 pandemic is an external factor beyond the ability of debtors to control, which causes difficulties for debtors to repay credits originating from bank credits. Hadiah Putri Pratamawati reckons that the factors that influence NPLs of BUMN Commercial Banks are inflation, exchange rates, loan to deposit ratio (LDR), Capital Adequacy Ratio (CAR) and Operational Cost of Operating Income/Biaya Operasional Pendapatan Operasional (BOPO) (Pratamawati, 2018). Based on the COVID-19 case study, the investigation has been conducted to prove if COVID-19 has an impact on the level of non-performing loans (NPLs) of conventional commercial banks in Indonesia
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