Abstract for: The Effect of COVID-19 to Credit Risk and Bankruptcy Risk of State-Owned Bank in Indonesia: A System Dynamics Model
The COVID-19 pandemic has an impact on increasing credit risk of BNI (Bank Negara Indonesia). In 2020, non-performing loans (NPL) rose by 86.96% compared to the previous year, and loan at risk was at the level of 28.7% of the total loan. If the credit restructuring policy of the Otoritas Jasa Keuangan (OJK/Financial Services Authority) in March 2022 ends and the economy does not grow normally, then the bank will face serious problems regarding the risk of bankruptcy. This study simulates the bankruptcy risk of BNI after the credit restructuring policy of OJK ends in March 2022, especially in Capital Adequacy Ratio (CAR) and NPL level by using system dynamics methodology. From the model simulation, if 50% of the restructured credit value in 2020 amounting to IDR 150 trillion cannot be converted into performing loan, then BNI will face a serious risk of bankruptcy. Policy to handle that risk might be based on internal decision (regarding interest rate of loan and saving, decision about extended loan restructure, or more third party fund to collect) and external role of the government as the owner of the bank that needs to prepare an early rescue policy as the last resort.