Credit Relaxation Policy on Rural Credit Bank in the Pandemic Period
Keywords:
Rural Bank, liquidity, profitability, credit relaxation
Abstract
when the COVID-19 outbreak, Indonesian banks' financial performance has declined, particularly when the lockdown policy was put into place. banking operations, with a focus on rural banks (BPR), which were previously mostly carried out face-to-face, had to move online. BPRs in Indonesia, most of which are located in areas where internet signals are difficult to reach, experience problems in communicating with customers. The Indonesian government intervened in banking operations by issuing a Credit Relaxation policy which could be disseminated by all banks to their customers. Thus, the purpose of this study is to determine and test experimentally, using data from 259 BPRs in Central Java, whether the Indonesian government's credit relaxation policy can improve the liquidity and profitability of BPRs' financial performance. This research uses NPL as variabel independent and NIM, ROA, and Cash Ratio as variabel dependent. The research results show that the credit relaxation policy can play a role in increasing liquidity and profitability in a more positive direction.
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References
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Weiss, A., & Stiglitz, J. E. (1981). Credit Rationing in Markets With Imperfect Information. The American Economic Review, 71(3), 393–410. https://doi.org/10.2139/ssrn.1010965
Yurttadur, M., Celiktas, E., & Celiktas, E. (2019). The Place of Non-performing Loans in the Turkish Banking Sector. Procedia Computer Science, 158, 766–771. https://doi.org/10.1016/j.procs.2019.09.113
AL-QUDAH, A. M. (2020). Macroeconomic and Bank-Specific Variables and the Liquidity of Jordanian Commercial Banks. Journal of Asian Finance, Economics and Business, 7(12), 85–93. https://doi.org/10.13106/JAFEB.2020.VOL7.NO12.085
Ali, A., & Sajid, M. (2017). Determinants of Bank Performance: Empirical Evidence from Listed Banks of Pakistan. SSRN Electronic Journal, 8(1), 47–55. https://doi.org/10.2139/ssrn.3008936
Arif, A., & Nauman Anees, A. (2012). Liquidity risk and performance of banking system. Journal of Financial Regulation and Compliance, 20(2), 182–195. https://doi.org/10.1108/13581981211218342
Athanasoglou, P. P., Delis, M., & Staikouras, C. (2022). Determinants of bank profitability in the South Eastern European region. SSRN Electronic Journal, January 2006. https://doi.org/10.2139/ssrn.4163741
Basu, N., & Chevrier, M. (2011). Distance, information asymmetry, and mergers: evidence from Canadian firms. Managerial Finance, 37(1), 21–33. https://doi.org/10.1108/03074351111092120
Beyhaghi, M., Fracassi, C., & Weitzner, G. (2020). Bank Loan Markups and Adverse Selection. SSRN Electronic Journal, June. https://doi.org/10.2139/ssrn.3733932
Damayanthi, I. G. A. E., Wiagustini, N. L. P., Suartana, I. W., & Rahyuda, H. (2022). Loan restructuring as a banking solution in the COVID-19 pandemic: Based on contingency theory. Banks and Bank Systems, 17(1), 196–206. https://doi.org/10.21511/bbs.17(1).2022.17
Forgione, A. F., & Migliardo, C. (2019). An empirical analysis of the impact of trade credit on bank debt restructuring. Economia Politica, 36(2), 415–438. https://doi.org/10.1007/s40888-018-0110-x
Hemingway, B. (2022). Banking Regulation and Collateral Screening in a Model of Information Asymmetry. Journal of Financial Services Research, 61(3), 367–405. https://doi.org/10.1007/s10693-021-00357-w
Islam, M. S., & Nishiyama, S. I. (2019). Non-performing loans of commercial banks in south asian countries: Adverse selection and moral hazard issues. Asian Economic and Financial Review, 9(9), 1091–1106. https://doi.org/10.18488/journal.aefr.2019.99.1091.1106
Karim, M. R., Shetu, S. A., & Razia, S. (2021). COVID-19, liquidity and financial health: empirical evidence from South Asian economy. Asian Journal of Economics and Banking, 5(3), 307–323. https://doi.org/10.1108/ajeb-03-2021-0033
Kloks, P. (2021). Matthias Thiemann: The Growth of Shadow Banking: A Comparative Institutional Analysis. Financial Markets and Portfolio Management, 35(2), 269–272. https://doi.org/10.1007/s11408-021-00378-4
Laryea, E., Ntow-Gyamfi, M., & Alu, A. A. (2016). Nonperforming loans and bank profitability: evidence from an emerging market. African Journal of Economic and Management Studies, 7(4), 462–481. https://doi.org/10.1108/AJEMS-07-2015-0088
Marín Hernández, S., Gras Gil, E., & Anton Renart, M. (2015). Spanish credit institutions: Do efficiency and solvency support the first decisions on bank restructuring from a financial point of view 2008-2012? Contaduria y Administracion, 60(2), 367–388. https://doi.org/10.1016/S0186-1042(15)30005-X
Nasucha, M., & Moenawar, M. G. (2020). Covid-19, Asimetri Dan Keterbukaan Informasi Publik. Media, Komunikasi, Dan Informasi Di Masa Pandemi COvid-19, 74–93. https://eprints.uai.ac.id/1465/
Nguyen Duong, T. T., Phan, H. T., Hoang, T. N., & Thi Vo, T. T. (2020). The effect of financial restructuring on the overall financial performance of the commercial banks in Vietnam. Journal of Asian Finance, Economics and Business, 7(9), 75–84. https://doi.org/10.13106/JAFEB.2020.VOL7.NO9.075
Noraini, M. A., & Salina, K. (2014). Risk Management Practices of Selected Islamic Banks in Malaysia. Aceh International Journal of Social Sciences, 3(1), 26–36.
Purwono, R., Nugroho, R. Y. Y., & Mubin, M. K. (2019). Response on new credit program in Indonesia: An asymmetric information perspective. Journal of Asian Finance, Economics and Business, 6(2), 33–44. https://doi.org/10.13106/jafeb.2019.vol6.no2.33
Sakouvogui, K., & Shaik, S. (2020). Impact of financial liquidity and solvency on cost efficiency: evidence from US banking system. Studies in Economics and Finance, 37(2), 391–410. https://doi.org/10.1108/SEF-04-2019-0155
Sekaran Uma, B. R. (2014). Research Method in Business. Paper Knowledge . Toward a Media History of Documents, 1–447.
Servaes, J. (2008). Communication for development and social change. In Communication for Development and Social Change (Issue January 2008). https://doi.org/10.4135/9788132108474
SINGH, S. K., BASUKI, B., & SETIAWAN, R. (2021). The Effect of Non-Performing Loan on Profitability: Empirical Evidence from Nepalese Commercial Banks. Journal of Asian Finance, Economics and Business, 8(4), 709–716. https://doi.org/10.13106/jafeb.2021.vol8.no4.0709
Sukmana, R., & Suryaningtyas, S. (2016). Determinants of Liquidity Risk in Indonesian Islamic and Conventional Banks: A Panel Regression. Al-Iqtishad: Journal of Islamic Economics, 8(2), 187–200. https://doi.org/10.15408/aiq.v8i2.2871
Supriyono, E., & Sumarta, N. H. (2020). Efektifitas Kebijakan Relaksasi Kredit Pada Umkm Batik Terdampak Covid-19 Di Kota Solo. Islamic Sustainability Reporting and Conventional Sustainability Reporting, November, 312–327. http://prosiding.stie-aas.ac.id/index.php/prosenas/article/view/70
Tarus, D. K., Chekol, Y. B., & Mutwol, M. (2012). Determinants of Net Interest Margins of Commercial Banks in Kenya: A Panel Study. Procedia Economics and Finance, 2(Af), 199–208. https://doi.org/10.1016/s2212-5671(12)00080-9
Teresienė, D., Keliuotytė‐staniulėnienė, G., & Kanapickienė, R. (2021). Sustainable economic growth support through credit transmission channel and financial stability: In the context of the covid‐19 pandemic. Sustainability (Switzerland), 13(5), 1–37. https://doi.org/10.3390/su13052692
Thariq, D. A., & Pangestuty, F. W. (2022). DAMPAK PERPANJANGAN RELAKSASI KREDIT TERHADAP LIKUIDITAS PERBANKAN SAAT PAN- DEMI COVID-19. CONTEMPORARY STUDIES IN ECONOMIC, FINANCE, AND BANKING, 1(3), 423–436. http://dx.doi.org/10.21776/csefb.2022.01.3.06.
Umar, M., & Sun, G. (2016). Non-performing loans (NPLs), liquidity creation, and moral hazard: Case of Chinese banks. China Finance and Economic Review, 4(1). https://doi.org/10.1186/s40589-016-0034-y
Wahyuni, S., Pujiharto, Azizah, S. N., & Zulfikar. (2021). “Impact of the COVID-19 pandemic and New Normal implementation on credit risk and profitability of Indonesian banking institutions.” Banks and Bank Systems, 16(3), 104–112. https://doi.org/10.21511/bbs.16(3).2021.10
Weiss, A., & Stiglitz, J. E. (1981). Credit Rationing in Markets With Imperfect Information. The American Economic Review, 71(3), 393–410. https://doi.org/10.2139/ssrn.1010965
Yurttadur, M., Celiktas, E., & Celiktas, E. (2019). The Place of Non-performing Loans in the Turkish Banking Sector. Procedia Computer Science, 158, 766–771. https://doi.org/10.1016/j.procs.2019.09.113
Published
2024-04-16
How to Cite
Sulihanto, S., Apriani Dorkas Rambu Atahau, Ronny Prabowo, & Hari Sunarto. (2024). Credit Relaxation Policy on Rural Credit Bank in the Pandemic Period. Jurnal Scientia, 13(02), 1503-1511. Retrieved from http://infor.seaninstitute.org/index.php/pendidikan/article/view/2352
Section
Articles
