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Loan Restructuring and Deposit Growth: Evidence from the Market Discipline during the COVID-19 Outbreak

Author

Listed:
  • Indra Tumbelaka

    (Indonesia Financial Services Authority, Indonesia)

Abstract

Amid the COVID-19 pandemic, banks boosted loan restructuring efforts to offer borrowers assistance and preserve credit quality. This study employs dynamic and static panel data from Indonesian commercial banks to include restructured loans as a metric for assessing market discipline prior to and during the pandemic. Depositors shown discipline about banks’ credit risk during the COVID-19 period and exhibited heightened sensitivity to restructured loans. Subsequent analysis indicates that the association between deposit growth and restructured loans was more pronounced in government, small, and publicly listed banks during the outbreak.

Suggested Citation

  • Indra Tumbelaka, 2025. "Loan Restructuring and Deposit Growth: Evidence from the Market Discipline during the COVID-19 Outbreak," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 28(2), pages 199-216, July.
    • Handle: RePEc:idn:journl:v:28:y:2025:i:2b:p:199-216
    DOI: https://doi.org/10.59091/2460-9196.2167
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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