An Analysis of Regional Development Banks' Health Assessment Before and During the COVID-19 Pandemic Using the RGEC Method

Abstract

Purpose: The objective of this study is to analyze composite ratings and identify variations in bank health levels, as measured by the RGEC method, pre-pandemic and pandemic periods at regional development banks over the 2018-2022 period.

Methodology/approach: This study employs a comparative approach, utilizing the RGEC method to evaluate the composite rating of bank health. The statistical tests applied include the Wilcoxon Difference Test and the Paired Sample T-Test, processed using SPSS software version 23. The analysis is based on annual financial statements from 2018 to 2022 for 27 regional development banks in Indonesia.

Results/findings: The results indicate that the health of regional development banks, both before and during the pandemic, falls within the healthy composite rating category (PK-2). Significant differences were found in LDR, NIM, and CAR, while GCG did not exhibit substantial differences following the t-test analysis.

Limitations: This study only examined two years both pre-pandemic and pandemic periods. This was done to ensure consistent comparisons between the years.

Contribution: The findings of this study directly implicate bank management to pay more attention to its performance, especially in terms of bank health as one of the signals for investors who invest in the bank. this research also provides a signal to the government as the majority owner of the regional development bank as well as to bank customers who deposit their funds in the bank.

Novelty: The study examines 27 regional development banks across Indonesia, focusing on the impact of the COVID-19 pandemic, with RGEC analysis and using a different test statistical data test.