The Cyclicality of Allowance for Impairment Losses in Indonesia

Surjaningsih, Ndari; Hafidz, Januar; Adamanti, Justina; Muhajir, Maulana Harris; Sari, Dhian Pradhita

doi:10.1007/978-3-030-01784-2_5

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2021

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“…Besides, PSAK 71 introduces three stages of the allowance for credit losses (Surjaningsih et al, 2018). Stage 1 for performing loans with 12-month ECL, stage 2 for underperforming loans with lifetime ECL, and stage 3 for impaired loans with lifetime ECL.…”

Section: Resultsmentioning

confidence: 99%

Banking credit restructuring in Indonesia: Quo vadis?

Indramawan

2021

JIKO

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This research aims to analyze the impact of Coronavirus Disease (Covid-19) on the accounting practices in banks associated with Indonesian Financial Accounting Standards (PSAK) 71 – Financial Instrument, particularly the allowance for impairment losses (CKPN) to respond to the Indonesian Financial Service Authority's Regulation (POJK) Number: 11/POJK.03/2020 concerning credit restructuring program and quality assets assessment. The research methodology is triangulation. This study reveals that the restructuring program helps banks from a significant jump of weak quality credits. Banks need to analyze the recovery rate of debtors as a basis for the stage of PSAK 71 with the Expected Credit Loss approach. The higher the CKPN, the smaller the net income. Besides, a tremendous amount of CKPN will pressure the Capital Adequacy Ratio (CAR). Therefore, shareholders should increase the capital, or the Indonesian Financial Service Authority (OJK) forces the bank(s) into a merger or acquisition.

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Section: Resultsmentioning

confidence: 99%

Banking credit restructuring in Indonesia: Quo vadis?

Indramawan

2021

JIKO

View full text Add to dashboard Cite

show abstract

The Cyclicality of Allowance for Impairment Losses in Indonesia

Cited by 1 publication

References 5 publications

Banking credit restructuring in Indonesia: Quo vadis?

Banking credit restructuring in Indonesia: Quo vadis?

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