Loan restructuring as a banking solution in the COVID-19 pandemic: Based on contingency theory

Banks and Bank Systems

I Gusti Ayu Eka Damayanthi¹  Henny Rahyuda²  I Wayan Suartana³  Ni Luh Putu Wiagustini⁴ 

[1] Lecturer, Faculty of Economics and Business, Department of Accounting, Udayana University;Ph.D., Lecturer. Faculty of Economics and Business, Department of Management, Udayana University;Ph.D., Professor, Faculty of Economics and Business, Department of Accounting, Udayana University;Ph.D., Professor, Faculty of Economics and Business, Department of Management, Udayana University;

关键词: bank policy;    credit risk;    financial crisis;    uncertainty;   

DOI  :  10.21511/bbs.17(1).2022.17

来源: DOAJ

【 摘 要 】

The world’s economic growth has decreased due to the COVID-19 pandemic. Many companies are experiencing financial distress, so they cannot pay off their maturing debts. Banks as lenders face the risk of non-performing loans. The increasing number of unpaid loans will reduce a bank’s operating income and gain. The contingency approach is used as a conditional factor that can increase the effectiveness of firm performance. The relevance of this study is how banking strategies overcome the problem of uncertainty regarding risk and return during a pandemic. Contingency theory describes organizational success as influenced by contextual factors and established strategies. The purpose of this study is to systematically review the literature related to loan restructuring as a solution to non-performing loans in banking companies in Indonesia. The research method is a review of 40 articles from Scopus and a descriptive analysis of company financial statement notes to see what strategies banks are using during the COVID-19 pandemic. Based on contingency theory, the results of the study explain organizational success which is influenced by contextual factors and the established strategy. The more appropriate the strategy chosen in a given situation, the higher the achievement of organizational performance. A qualitative analysis provides a solution for a bank to overcome the problem of unpaid loans at maturity through a restructuring model strategy with modified loan terms.

【 授权许可】

Unknown