Banking Resilience in Indonesia: Financial Indicators and Regulatory Policies

Abstract

This study aims to evaluate the resilience of Indonesia’s banking sector by focusing on four key indicators: Non-Performing Loans (NPL), Capital Adequacy Ratio (CAR), profitability, and liquidity. A literature review method was employed, analyzing 17 academic articles published last five years alongside regulatory documents from the Financial Services Authority (Otoritas Jasa Keuangan/OJK) and Bank Indonesia. The findings reveal that although the pandemic increased pressure on the real and banking sectors, the industry remained relatively resilient. NPL was successfully controlled through credit restructuring policies, CAR stayed well above the minimum threshold, liquidity was supported by macroprudential measures, and profitability, though reduced, remained positive. However, resilience varied across bank types: Islamic banks were more stable in maintaining profitability, conventional banks were stronger in capital adequacy, while rural banks (BPR) were more vulnerable. These findings highlight the need for differentiated policy approaches tailored to each bank type. The study underscores the importance of long-term strategies such as enhancing efficiency, strengthening risk management, consolidating BPR, and accelerating banking digitalization to reinforce the stability of Indonesia’s financial sector.