I Gusti Ayu Eka Damayanthi

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.

This study examines the impact of the implementation of the Indonesian Financial Accounting Standard, credit risk, and credit restructuring on the formation of Allowance for Credit Losses (ACL) of commercial banks listed on the Indonesia Stock Exchange. The formation of ACL is regulated in PSAK 71 which is part of the Indonesian Financial Accounting Standard. The implementation of PSAK 71, and credit risk are expected to increase the ACL of commercial banks, however, credit restructuring programs will reduce the ACL. The research population is commercial banks listed on the Indonesia Stock Exchange in 2019–2020. The research sample is the entire research population. This study uses panel data regression analysis to examine the effect of the application of PSAK 71, credit risk, and credit restructuring on ACL for commercial bank loans. The findings show that the implementation of PSAK 71 and credit risk have a positive effect on the ACL, meanwhile, credit restructuring has a negative effect on the ACL.