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ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol.9, No.16, 2018
Effect of Financial Distress Ratio Banking Company in Indonesia
Period 2011-2015
Khayatun Nufus
Nicky Audina
Awaluddin Muchtar
Abstract
This study aims to analyze the influence of financial ratios proxied with Non Performing Loans (NPLs), Loans
to Deposit Ratio (LDR), Operational Costs to Operating Income (BOPO), and Return On Assets (ROA) to
financial distress. The data used in this research is obtained from the Annual Publication Financial Report of
commercial bank period 2011-2015.The population in this study were 35 commercial banks registered in the
Directory of Bank Indonesia in the category of Private Foreign Exchange National Banks. After passing the
stage of purposive sampling, obtained 16 (distress). The statistical method used to test the research hypothesis is
logistic regression method.results showed that all ratios simultaneously (simultaneously) have an effect on
financial distress but partially have no effect. The NPL ratio has no significant positive effect, LDR ratio has no
significant positive effect, BOPO ratio has negative effect is not significant and ROA ratio has negative effect is
not significant.
Keywords: NPL, LDR, BOPO, ROA, Financial Distress, Logistic Regression
PRELIMINARY
As we know, the global economy has undergone radical changes in the last two decades. Globalization and
technology have encouraged natural selection that leads to 'the strongest that survives'. The success of the market
will be obtained by companies that are able to adapt to the current environmental requirements of those who are
able to provide what people are ready to buy.
In its development, globalization caused some bad impacts that could be felt, one of them is global financial
crisis in 2008 which resulted in weakening business activity in general. One of the impacts of the 2008 financial
crisis in the national banking industry is Bank Century which is currently called Bank Mutiara. The decision to
take over Bank Century by the government on the grounds that the possibility of systematic impacts is
considered by some is not fair. In addition, the global financial crisis that occurred in 2008 also caused three big
state-owned banks namely Bank Mandiri, Bank BNI, and Bank BRI requested liquidity support from the
government to strengthen bank capital reserves or meet the commitment of infrastructure credit without having
to be disrupted liquidity.
The conditions mentioned above indicate a company is experiencing financial difficulties (financial distress)
which in the end if the company is not able to get out of these conditions then the company will go bankrupt.
Therefore, it takes a variety of ways to prevent a company from being trapped in a financial distress, one of
which is to predict financial distress in a company.
Some researchers categorize the condition of financial distress in various criteria. The company is deemed
experiencing financial distress when the company suffers losses for three consecutive years or more or when the
company has negative cash flows for three years or more (Lakhsan, in Aryani, 2015). According to Brahmana
(2007) a company is said to experience financial distress when the company has a performance that shows
negative operating profit, negative net profit, negative book equity value and the company experienced a merger.
The research of Almilia (2003) and Fitriyah and Hariyati (in Aryani, 2015) states that companies experiencing
financial distress ie companies that have EPS (Earning Per Share) negative two years in a row.
Based on the above description, the authors are encouraged to conduct research entitled "The Influence of
Financial Ratio to Financial Distress in Banking Companies in Indonesia Period 2011-2015".
LITERATURE REVIEW
CAMEL Ratio
In assessing bank performance, the CAMEL method is the standard method used by central banks around the
world. Central banks throughout the country have the duty and authority to maintain and control the banks in the
banking industry.
This research uses financial ratios with CAMEL method that is Capital, Assets, Management, Earning and
Liquidity in accordance with Bank Indonesia Regulation no. 6/10 / PBI / 2004 dated 12 April 2004 concerning
the Rating System for Commercial Banks and Circular Letter no. 6/23 / DPNP dated May 31, 2004 concerning
Commercial Bank Health Rating System. In accordance with the regulations and circulars of Bank Indonesia, all
commercial banks conducting conventional business activities are required to conduct quarterly bank soundness
ratings in March, June, September and December.
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Vol.9, No.16, 2018
According to Atikogullari (in Ayu Putri, 2010), the CAMEL approach is a type of financial analysis used to
evaluate the financial and managerial performance of a bank to establish the health and safety of the bank.
CAMEL ratio describes a relationship or comparison between a certain amount to another amount. With the
analysis of financial ratios can be obtained a picture of good or bad state of the state or financial position of a
bank.
The CAMEL ratio to be used in this study is as follows:
Non Performing Loan (NPL)
NPL is the ratio between non-performing loans to total loans (Taswan, in Novita and Farida, 2013). NPL is a
management capability in managing non-performing loans provided by banks. This ratio can be formulated as
follows (Circular Letter No. 12/11 / DPNP dated March 31, 2010):
NPL = (problem loans) / (total credit) x 100%
Loans to Deposit Ratio (LDR)
According to Pandia (in Novita and Farida, 2013), the LDR is the ratio between the credar given to third party
funds. If from a lot of credit given is not balanced with the amount of funds collected will cause the liquidity of
the bank is reduced. This ratio can be formulated as follows (Circular Letter No. 12/11 / DPNP dated March 31,
2010):
LDR = (total credit) / (total third party funds) x 100%
Operational Cost of Operating Income (BOPO)
Operational Costs of Operating Income (BOPO) or cost of efficiency are used to measure the bank's
management capability in controlling operational costs against operating income. This ratio can be formulated as
follows (Circular Letter No. 12/11 / DPNP dated March 31, 2010):
BOPO = (Operating costs) / (Operating income) x 100%
Return on Assets (ROA)
Return on Assets (ROA) is the ratio used to measure management ability to generate profit or income from asset
management (Cashmere, 2010). This ratio can be formulated as follows (Circular Letter No. 12/11 / DPNP dated
March 31, 2010):
ROA = (Gross profit) / (total assets) x 100%
Financial Distress
Financial distress or often called financial difficulties, occurs before a company actually went bankrupt.
Financial distress is a condition that indicates the stage of decline in the financial condition of the company that
occurred prior to the occurrence of bankruptcy or liquidation (Platt and Platt, 2002).
Financial distress can happen in various companies and can be a marker or signal of bankruptcy that may be
experienced by the company. If the company is already in the condition of financial distress, then the
management should be careful because it could have entered the stage of bankruptcy.
Management of companies experiencing financial distress must take action to overcome these financial
problems and prevent the occurrence of bankruptcy.
In addition to corporate governance issues, financial distress can also be caused by external conditions that
are outside the company, such as macroeconomic conditions. A number of authors suggest that macroeconomic
factors have a significant impact on the occurrence of financial difficulties and then will have an impact on
corporate bankruptcy. But these macroeconomic factors are relatively rare.
Some macroeconomic factors that can cause financial distress include fluctuations in inflation, interest rates,
Gross National Product (GNP), availability of credit, employee wage rates and so on. Some of the factors that
can cause financial difficulties are closely related to macroeconomic conditions (Graham et al., 2011).
FRAMEWORK
1. Effect of NPL on financial distress
Riyadi (2006) in his research stated that the greater the NPL level shows that banks are not professional in
managing credit and bank risk is quite high in line with the NPL ratio. Similarly with Almilia and Herdiningtyas
(2005) states that the worse the quality of bank credit that causes the number of problem loans is greater then the
possibility of a bank in the increasingly troubled and NPL have a positive effect. Hypothesis in this research are:
H1: NPL has a positive effect on financial distress.
2. The influence of LDR on financial distress
Santoso in Meilita and Suwardi (2014) said that the higher the LDR ratio the higher the probability of a bank
going bankrupt. This gives an indication of the lower bank liquidity capability in question. This is because the
amount of funds needed to finance the credit becomes greater (Dendawijaya, 2009).
The results of Sumantri and Jurnali (2010) stated that the LDR has a positive and significant impact on bank
insolvency prediction. The same is also obtained from Juniarsi and Suwarno (2005) who stated that LDR has a
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Vol.9, No.16, 2018
significant positive effect in predicting failure of national private commercial banks nondevisa. Hypothesis in
this research are:
H2: LDR has a positive effect on financial distress.
3. The influence of BOPO on financial distress
Almilia and Herdiningtyas (2005) in his research suggests that BOPO has a significant positive effect on the
problem condition. Similarly, research Riyadi (2006) states that the lower the ratio of BOPO means the better
performance of the bank's management, because it is more efficient in using existing resources in the company.
If the performance of the banking management is good then the company will generate the desired profit so the
company will not experience bankruptcy. Hypothesis in this research are:
H3: BOPO has a positive effect on financial distress.
4. Effect of ROA on financial distress
Riyadi (2006) states the greater the ratio of ROA, the greater the level of profit achieved by the bank so that
the possibility of a bank in problem condition is getting smaller. Thus the higher the bank's assets are allocated to
the loan and the lower the capital ratio the possibility of the bank to fail is increasing. While ROA is higher, the
higher the level of health of the bank so the possibility of banks experiencing financial distress will be smaller
(Haryati, 2001). Hypothesis in this research are:
H4: ROA has a negative effect on financial distress.
5. Effect of NPL, LDR, BOPO and ROA together to financial distress
In all the discussion of each of the above variables can be concluded that the ratio of NPL, LDR, BOPO and
ROA can give a big enough impact together on the prediction of bankruptcy conditions in banking companies in
Indonesia. So in this case the hypothesis that can be formulated is:
H5: NPL, LDR, BOPO and ROA have an effect on financial distress.
Based on the above description, it can be concluded framework of thinking is as follows:
Figure 2.1.Framework
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Tabel 3. 1
Kriteria Pemilihan Sampel
Tidak Memenuhi
No Kriteria Akumulasi
Kriteria
Terdaftar sebagai bank umum swasta nasional devisa di Direktori Bank
1 35 35
Indonesia
Terdaftar sebagai perusahaan perbankan di Bursa Efek Indonesia (BEI)
2 9 26
periode 2011-2015.
Bank umum selain bank syariah karena kriteria bank umum
2 4 22
konvensional berbeda dengan bank umum syariah.
Perusahaan mempublikasikan laporan keuangan secara rutin selama
3 6 16
periode 2011-2015.
Laporan keuangan yang diterbitkan menyediakan semua data yang
4 - 16
dibutuhkan mengenai variabel-variabel penelitian.
Bank yang diteliti tidak melakukan merger atau dibekukan selama
5 - 16
periode 2011-2015.
Jumlah perusahaan sampel 16
Total tahun pengamatan 5
Jumlah total tahun pengamatan 80
POPULATION AND SAMPLES
The population used in this study are all national private foreign exchange public banks listed in the Bank
Indonesia Directory 2011-2015.
The sample selection used in this research is purposive sampling. According Sugiyono (2007) purposive
sampling technique is a technique of determining the sample with certain considerations. The sample in this
study is determined by the following criteria:
A. Registered as a banking company in Indonesia Stock Exchange (IDX) period 2011-2015.
B. Commercial banks other than sharia banks because the criteria of conventional commercial
banks differ from sharia commercial banks.
C. The Company publishes its financial statements regularly during the period 2011-2015.
D. The published financial statements provide all the required data on the research variables.
E. The surveyed bank did not merge or freeze during the period 2011-2015.
F. The banks that are sampled fall into two categories:
1) Banks that are not problematic, that is:
a) These banks have not suffered losses in 2011-2015.
b) The banks are still operating until the observation year ends.
2) Problem banks, namely:
a) Banks that have negative EPS values between 2011-2015, because according to
Elloumi and Gueyie (2001) are marked by a decrease in EPS.
b) Banks declared bankrupt or closed by Bank Indonesia.
The sample selection process based on predetermined criteria is shown in the
following table:
DATA ANALYSIS TECHNIQUE
This study uses descriptive statistical analysis and logistic regression analysis. The method of analysis used in
this study is binary logistic regression analysis. Selection of this method is based on the reason because the
independent variables that exist in this study is a combination of metric and non metric and the dependent
variable is binary data. Binary data is a type of nominal data with two criteria. The purpose of using logistic
regression is to predict the dependent variable in the form of binary variables using the data of independent
variables that are already known in magnitude.
The dependent variable of this study is a dichotomous variable with a description of one (1) for a distressed
firm and a zero (0) description for a non-distressing company. Logistic regression in this research is used to test
the influence of financial ratios (NPL, LDR, BOPO, ROA) to financial distress.
The logistic regression model applied to the model proposed by the researcher was tested using SPSS 23
software. The analysis of this study did not require the normality test and the classical assumption test on the
independent variable (Ghozali, 2012). Testing is done with level of significance (α) 5%. Logistic regression
model used in this research is as follows:
FD = α + β1. NPL + β2. LDR + β3. BOPO + β4. ROA + €
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Information:
FD: Dummy variable, code "1" for distress company and code "0" for non-distress
company.
Α: Constants
Β: The variable coefficients
NPL: Non Performing Loan
LDR: Loans to Deposit Ratio
BOPO: Operational Cost of Operating Income
ROA: Return On Assets
RESULTS AND DISCUSSION
Descriptive Statistics Analysis
To describe the variables studied, used descriptive statistics that can analyze and present quantitative data in
order to describe the data. In the following table can be seen the minimum, maximum, average (mean) and
standard deviation of each research variable.
N Minimum Maximum Mean Std. Deviation
Non Performing Loan 80 .002 .123 .02390 .022592
Loans to Deposit Ratio 80 .038 1.192 .87984 .155633
Biaya Operasional terhadap Pendapatan Operasional 80 .362 1.849 .81619 .219641
Return On Assets 80 -.076 .038 .01328 .018059
Valid N (listwise) 80
The minimum value of the NPL variable is 0.002 (0.2%) obtained from Bank Bumi Arta in 2013 and the
maximum NPL of 0.123 (12.3%) occurred in Bank J. Trust Indonesia (Bank Mutiara) in 2013 and the value
Average NPL of 0.02390 (2.39%) and standard deviation of 0.022592 (2.26%). Viewed from the average NPL,
this indicates that the risk of non performing loans on loans provided in all of the observed data has a good
enough ability to manage credit because it is still below 5% as stipulated by Bank Indonesia.
The minimum value of the LDR variable is 0.038 (3.8%) obtained from Bank CIMB Niaga in 2015 and the
maximum LDR of 1.192 (119.2%) occurs at Bank QNB Kesawan in 2015 and the average LDR of 0 , 87984
(87.9%) and standard deviation of 0.155633 (15.6%). Viewed from the average LDR, this indicates that the
liquidity level of the bank in general is quite good because it has not exceed the maximum limit set by Bank
Indonesia that is 100%.
The minimum value of the BOPO variable is 0.362 (36.2%) obtained from Bank BCA in 2013 and the
maximum BOPO value of 1.849 (184.9%) occurs in Bank J. Trust Indonesia in 2013 and the average BOPO
value of 0.81619 (81.6%) and standard deviation of 0.219641 (21.9%). Viewed from the average of BOPO, this
indicates that the operational cost level of the operational opinion of the bank in general is quite good because it
is still below 94% as determined by Bank Indonesia.
The minimum value of ROA is -0.076 (-7.6%) obtained from Bank J. Trust Indonesia (Bank Mutiara) in
2013 and a maximum ROA value of 0.038 (3.8%) occurred in Bank Central Asia (BCA) at In 2015 and an
average ROA of 0.01328 (1.3%). Viewed from the average ROA, this indicates that the level of ability of the
company in obtaining profit (profit before tax) generated from the average total assets of banks in general good
because it exceeds the minimum limit set by Bank Indonesia is 0.5%.
Based on the results of the sample, obtained a total of 16 banks per year, as many as 12 banks are non-
distress (bank) and 4 banks included in the criteria of problems (distress). Problem banks include Bank MNC
(ICB Bumiputera Indonesia), Bank QNB Kesawan, Bank OCBC NISP, and Bank of India Indonesia.
TESTING LOGISTIC REGRESSION
1) Assess the Feasibility of the Regression Model (Goodness of Fit)
The purpose of the Goodness of Fit Test is to determine whether the probability distribution of the hypothesis
can be used as a model for a particular population. This regression model is measured by the Chi-square value at
the bottom of the Hosmer and Lemeshow test. The research model can be said to fit or fit the data if the
probability Sig>> 0,05, whereas research model is said not fit or not according to data if its probability (sig value)
<0,05.
Step Chi-square df Sig.
1 .000 2 1.000
In the above table it is found that the statistical value of Hosmer and Lemeshow Test seen in the column of
significance shows the value of 1,000 (100%) which, when compared with the significance value of 5%, then the
probability significance in this study is more than 0.05 (1,000> 0.05), then the null hypothesis (H0) in this study
is acceptable. This condition indicates that the model used in this study fit with the data or means the regression
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model is feasible to be used for further analysis, because there is no real difference between the observed
classification.
2) Conducting Simultaneous Testing (Omnibust Test of Model Coefficient)
Based on the sample data of 16 samples of banking firms listed on the Indonesia Stock Exchange (BEI) under
study using Omnibust Test of Model Coefficient to simultaneously test independent variables against the
dependent variable, the results are:
From the above data, it can be concluded that every independent variable, NPL, LDR, BOPO and ROA
together affects the dependent variable that is financial distress, because it has a significance value of 0.000
which is smaller than 0.050 (0.000 ≤ 0.050).
The next step is to assess the overall model (Overall Model Fit). To assess the overall model (Overall
Model Fit) is to compare the number -2LL (-2Log Likelihood) in the first step (block number 0) with the number
-2LL (2Log Likelihood) in the next step (block number 1). According Ghozali (2012) if there is a decrease, then
the model hypothesized fit or in accordance with the data. Decreasing the -2LL (-2Log Likelihood) value
indicates that this test model is considered fit. This means the addition of independent variables ie NPL ratio,
LDR, BOPO, ROA into the test model will improve the regression model.
Tabel 4. 1
Overall Model Fit Test
Iteration -2 Log Lokelihood
Step 0 52.013
1 0
Sumber: Data sekunder yang telah diolah
The above table shows the feasibility test (Overall Model Fit) with respect to the number at the beginning of
-2LL (-2Log Likelihood) block number = 0, amounted to 52.013 and the number in -2LL (-2Log Likelihood)
block number = 1, of 0. This There is a decrease of -2LL (-2Log Likelihood) in block number 0 and block
number 1 of 52,013 - 0 = 52,013. This decrease can be interpreted that with the addition of independent variable,
that is ratio of NPL, LDR, BOPO, and ROA put into model can improve model of this research fit and show
overall logistic regression model used is good model or fit with data.
3) Testing Coefficient of Determination (Nagelkerke's R Square)
The next test is the coefficient of determination test using Nagelkerke's R Square. This test aims to find out how
big the model used to explain dependent variaben by using independent variables used in this test. The value of
Nagelkerke's R Square varies between 1 (one) and 0 (zeros). Here is a table showing the value of Nagelkerke's R
Square.
Tabel 4. 2
Model Summary
Step -2 Log likelihood Cox & Snell R Square Nagelkerke R Square
1 .000a .478 1.000
a. Estimation terminated at iteration number 20 because maximum iterations has been reached. Final solution
cannot be found.
The magnitude of the regression coefficients can be seen in the Cox and Snell R Square and Nagelkerke R
Square columns. Based on the results of data processing using logistic regression method, the coefficient of
determination obtained from Cox and Snell R Square is 0,478 (47,8%) and Nagelkerke R Square 1,000 (100%).
It shows the combination of independent variable that is NPL ratio, LDR, BOPO and ROA able to explain
variation of dependent variable that is financial distress that is 100%.
4) Testing Regression Coefficients
The final step in this research is to test the regression coefficient. Testing regression coefficient aims to find out
how much independent variables affect the dependent variable. Logistic regression testing in this study used a
significance level of 0.05 (5%). If the significance of ¬p-value is greater than 5%, then the hypothesis is rejected.
This means that the independent variable has no significant effect on the dependent variable. If the significance
of p-value is less than 5%, then the alternative hypothesis is accepted. This means that independent variables
have a significant effect on the dependent variable.
And the results of testing logistic regression equation, obtained regression model described in the following
table.
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Tabel 4. 3
Model Regresi
Variables in the Equation
95% C.I.for EXP(B)
B S.E. Wald df Sig. Exp(B) Lower Upper
Step 1a NPL 30782.380 326127.645 .009 1 .925 . .000 .
LDR 2906.554 30841.374 .009 1 .925 . .000 .
BOPO -1637.941 17488.249 .009 1 .925 .000 .000 .
ROA -46578.641 489861.391 .009 1 .924 .000 .000 .
Constant -2427.981 25708.837 .009 1 .925 .000
a. Variable(s) entered on step 1: NPL, LDR, BOPO, ROA.
FD = -2.427,891 + 30.782,380NPL + 2.906,554LDR – 1.637,941BOPO – 46.578,6416ROA + €
DISCUSSION
1. Effect of NPL on Financial Distress
Based on the above table it can be seen that the variable NPL has p-value of 0.925 where 0.925> α 0.05 thus H0
accepted, HA rejected. This shows that NPL has no significant effect on financial distress condition. Regression
coefficient value of NPL ratio is 30,782,380, the coefficient direction in this research is positive sign, which
means that the higher the NPL, the higher the probability of a bank in problem condition. This is because the
NPL ratio shows the high number of bad loans in banks. The larger NPLs above 5% indicates the worse the
credit quality of the bank due to the high non-performing loans and the higher the credit risk that the bank has to
face.
2. The influence of LDR on Financial Distress
Based on the above table it can be seen that the LDR variable has a p-value of 0.925, where 0.925> α 0.05 thus
H0 is accepted, HA is rejected. This indicates that LDR does not have a significant effect on financial distress.
The value of regression coefficient of LDR ratio is 2,906,554, the coefficient direction in this research is positive
sign, which means that the higher LDR, the greater the probability of a bank in problem condition.
3. The influence of BOPO on Financial Distress
Based on the above table it can be seen that the BOPO variable has a p-value of 0.925, where 0.925> α 0.05 thus
H0 is accepted, HA is rejected. This shows that BOPO has no significant effect on financial distress condition.
The value of regression coefficient of BOPO ratio is -1.637,941, the coefficient direction in this research is
negative sign which means that the higher the BOPO, the smaller the probability of a bank in problem condition.
4. Effect of ROA on Financial Distress
Based on the above table it can be seen that the variable ROA has a p-value of 0.924, where 0.924> α 0.05 thus
H0 accepted HA rejected. This shows ROA does not have a significant effect on the condition of financial
distress. The value of the regression coefficient of ROA ratio is -4.6578,641, the coefficient direction in this
study is negative sign which means that the higher the ROA, the smaller the probability of the bank sutau in
problem condition.
CONCLUSIONS AND RECOMMENDATIONS
A. Conclusion
Based on the discussion of research results, it can be concluded as follows:
1. The banking finance ratio in Indonesia proxyed by NPL, LDR, BOPO and ROA shows good results. This is
because the average NPL, LDR, BOPO and ROA of all sampled companies are still at the threshold
permitted by Bank Indonesia. The average NPL ratio is 2.39% where the healthy threshold determined by
Bank Indonesia is ≤5%. The average LDR ratio is 87.9% where the healthy threshold determined by Bank
Indonesia is 50% <ratio ≤ 100%. The average BOPO ratio was 81.6% whereby the healthy threshold
determined by Bank Indonesia was ≤94%. The average ROA ratio is 1.3% where the healthy threshold
determined by Bank Indonesia is ≥ 0.5%.
2. Non-Performing Loan (NPL) ratio has no significant effect on financial distress. This can be seen from the
result of logistic regression test of NPL with p-value equal to 0,925 where 0,925> α 0,05.
3. Loans to Deposit Ratio (LDR) ratio has no significant effect on financial distress. This can be seen from the
result of logistic regression test of LDR with p-value equal to 0,925 where 0,925> α 0,05.
4. Operating Cost Ratio to Operating Income (BOPO) has no significant effect on financial distress. This can be
seen from the result of BOPO logistic regression test with p-value equal to 0,925 where 0,925> α 0,05.
5. Return On Assets (ROA) ratio has no significant effect on financial distress. It can be seen from ROA logistic
regression test with p-value equal to 0,925 where 0,924> α 0,05.
6. The ratio of NPL, LDR, BOPO, and ROA have an effect on financial distress. This can be seen from the
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Omnibus Test with significant value 1,000 where 1,000> 0,05.
B. Suggestions
Based on the results of the analysis and the conclusions that have been described, the suggestions that can be
given are as follows:
1. Theoretical aspects
This study has limitations on the measurement of group category of companies experiencing financial distress
and not experiencing financial distress based only on one index size only negative earnings. This research is also
only conducted on foreign private national banking company so it can not really represent the banking
companies in BEI. Subsequent research is suggested to expand the research sample and use other variables
related to financial distress measurements other than CAMEL variables such as firm size, go public bank status
and non-public bank, operating cash flow or corporate governance.
2. Practical Aspects
For the Company
Bank management is expected to maintain NPL, LDR, BOPO and ROA ratios in order not to cross the safe
threshold set by Bank Indonesia.
For Investors
Investors and potential investors are expected to always pay attention to the ratio of NPLs, LDR, BOPO and
ROA and other financial ratios before investing so as not to put their funds in a distress company that will result
in at least the benefits gained.
For Regulators
Regulators in this case Bank Indonesia is expected to always monitor the level of ratios in banks and further
encourage banks in implementing risk management and Good Corporate Governance (GCG) to prevent banks in
troubled conditions.
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