Title: Assessing the dynamics of non-performing loans and credit growth in Indonesia during COVID-19

Authors: Toifsa Rosita Dewi; Tastaftiyan Risfandy; Nurazilah Zainal

Addresses: Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami 36A Surakarta 57126, Indonesia ' Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami 36A Surakarta 57126, Indonesia ' Faculty of Business and Management, Universiti Teknologi MARA, Jl. Seremban Tiga 18, 70300 Seremban, Negeri Sembilan, Malaysia

Abstract: This research aims to analyse the impact of non-performing loans (NPLs) on credit growth in Indonesia during the COVID-19 pandemic. We use data from 90 conventional and Islamic banks in Indonesia for the period 2020q2 to 2022q1 particularly when COVID-19 caused banks' NPLs to increase significantly. We find that NPLs had significant negative effect on credit growth for both Islamic and conventional banks, meaning that high NPL levels have reduced credit growth. In addition, in this paper we also find that the negative impact of NPLs on credit growth is more severe for Islamic banks. Meanwhile, government-owned banks are also found to be better in mitigate the adverse impact of the NPLs.

Keywords: NPLs; non-performing loans; bank lending; credit growth; COVID-19; Indonesia.

DOI: 10.1504/IJMEF.2026.153823

International Journal of Monetary Economics and Finance, 2026 Vol.19 No.1, pp.39 - 59

Received: 03 Sep 2024
Accepted: 18 Jun 2025
Published online: 27 May 2026 *

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