Ni Luh Putu Wiagustini

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 explores rural banks’ efforts to leverage intangible assets, particularly organizational culture, to achieve financial sustainability. It examines how organizational culture influences service innovation and how social capital strengthens these relationships to support financial sustainability. The study utilized a quantitative research design targeting a population of 132 rural banks in Bali Province, Indonesia. Using a non-probability sampling technique, specifically saturation sampling, 131 valid samples were analyzed after excluding one due to unreliable data. Data were collected through survey questionnaires and analyzed using path analysis. The results indicate that organizational culture positively influences financial sustainability (path coefficient = 0.104, p = 0.027) and service innovation (path coefficient = 0.141, p = 0.015). Service innovation significantly enhances financial sustainability (path coefficient = 0.741, p = 0.000). Moreover, social capital strengthens the relationship between organizational culture and service innovation (interaction term coefficient = 0.167, p = 0.013) and contributes positively to financial sustainability (interaction term coefficient = 0.124, p = 0.019). However, social capital negatively impacts financial sustainability (path coefficient = –0.51, p = 0.000) and service innovation (path coefficient = –0.688, p = 0.000). These findings underscore the importance of fostering a robust organizational culture and prioritizing service innovation to overcome resource constraints and achieve financial sustainability. The study aligns with contingency theory, highlighting that optimal actions depend on the specific internal and external conditions faced by rural banks.