Abstract :

This study examines the relationship between COVID-19 variables (COVID-19 cases and COVID-19 deaths) and the nonperforming loan (NPL) ratio in Indonesian conventional banks from Q1 2017 to Q4 2022. Data from 56 conventional banks— comprising 4 government-owned and 52 privately-owned banks, were gathered from the Indonesian Financial Service Authority’s bank publication reports. Utilizing a quantitative approach, panel data regression with a fixed effect model is employed, with the NPL ratio as the dependent variable. COVID-19 cases and COVID-19 deaths are the main independent variables. Control variables include loan-to-deposit ratio, bank size, return on assets, regulatory capital ratio, equity ratio, GDP growth rate, inflation rate, overnight rate, and unemployment rate. The analysis is conducted separately for COVID-19 cases and COVID-19 deaths to independently evaluate their impact on the NPL ratio. Results indicate a significant positive relationship between COVID-19 cases and COVID-19 deaths with the NPL ratio. Additionally, the study identifies negative significant relationships between the NPL ratio and return on assets, loan-to-deposit ratio, bank size, regulatory capital ratio, and GDP growth rate.

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Keywords :

Banking, conventional banks, COVID-19 cases, COVID-19 death, COVID-19 pandemic, non-performing loan ratio

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