POTENTIAL BANKRUPTCY WITH SYSTEMIC IMPACT DURING PANDEMIC

Abstract

The world economy condition was not in the best condition in 2019 until
several years later. This is due to the Covid pandemic, which has forced
several countries to take firm action in the form of limiting community
activities as a whole, resulting in a decline in economic activity. Restrictions
on community activities will result in a general economic downturn marked by
a decline in economic growth. The banking business, which relies heavily on
good economic conditions, will certainly be affected. The worst possibility
that can happen is the bankruptcy of the bank caused by the pandemic. This
study tries to reveal how the potential for bankruptcy may be experienced by
the bank. The sample of this research is a group of banks with systemic impact
in Indonesia based on the decision of the Financial Services Authority of the
Republic of Indonesia in 2017. According to this decision, there are fifteen
banks in Indonesia which are categorized as systemic impact banks. This study
used fourteen banks and left one bank with a systemic impact due to
insufficient data for processing. By using commonly used bankruptcy
measures, this study concludes that in the period of observation, there are three
banks that have the potential to go bankrupt and the rest are in the gray area
and there is no bank that does not have the potential to go bankrupt.