The Effect of the Financial Services Authority's Credit Relaxation Policy Against Commercial Bank Credit Risk Before and During Pandemic Covid-19

Abstract

The COVID-19 pandemic that has been going on since March 2, 2020 has had an impact on changes in the social order of life as well as a decline in the performance of the national economy and the banking industry. The pressure of the Covid-19 pandemic has the potential to reduce the performance of commercial bank debtors which in turn will reduce credit quality and increase the risk of debtor default (credit risk) which is reflected in the indicatorsNon-Performing Loans (NPL).
Financial Services Authority (OJK))issued a credit relaxation policy package through OJK Regulation (POJK) Number 11/POJK.03/2020 as amended by POJK Number 17/POJK.03/2021, to anticipate increasing credit risk. The purpose of this research isto find out ifthere is an effect of the OJK credit relaxation policy on the credit risk of Commercial Banks before and during the covid-19 pandemic. This research is a qualitative research using secondary data taken from Indonesian Banking Statistics. The results of the study concluded that the OJK credit relaxation policy, which implemented credit quality assessments based solely on the ability to pay debtors, was proven to have been able to suppress the spike in the credit risk level of Commercial Banks during the Covid-19 pandemic.