Perpustakaan Digital ITB

Banks are one of the important sectors in supporting the progress of the country's economy, so bank performance must be well maintained. One of the parameters that can measure a bank's performance is through Non-Performing Financing/Loans (NPF/NPL), which can determine the efficiency of management of loan funds provided by the Bank to customers (Haneef, Rana, & Karim, 2012). The Covid-19 pandemic, which attacked various sectors and weakened economic growth, could increase the number of non-performing loans (NPF/NPL) in the banking industry (CEIC Data, 2021). Problems regarding the increasing number of non-performing loans/financing (NPF/NPL) for the banking industry could be caused by excessive risk-taking. The problem of excessive risk-taking cannot be observed directly, but this problem can be seen by observing the behaviour of banks in taking excessive risks in lending. Therefore, research is needed to analyze the indications of excessive risk-taking and Covid-19 in conventional banks and Islamic banks in Indonesia, leading to non-performing loans. The author's research aims to find out whether there are indications of the Covid -19 pandemic. The author implements a threshold regression model to detect excessive risk that leads to moral hazard indications. This kind of research has been previously conducted by Novellini & Ulpah (2017), which shows a moral hazard in lending behavior by Bank Indonesia. Novellini & Ulpah (2017) adopted the methodology applied by Zhang et al. (2016), who conducted a similar study with Bank data in China. These studies show that Covid-19 Pandemic Situations have a positive and significant correlation with the NPL/NPF ratio. Beside that, there are no conventional banks and Islamic banks that are indicated to carry out excessive risk taking in this study. Keywords : Excessive Risk-Taking, Moral Hazard, NPL, NPF, Bank