Proceedings of the International Joint Conference on Arts and Humanities 2023 (IJCAH 2023)

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Navigating Risk and Resilience: Exploring Prudential Policies for Proactive Prevention of Non-Performing Loans (NPLs)

Authors
Miftah Idris1, *, Hasbir Paserangi1, Padma D. Liman1, Oky Deviany1
1Faculty of Law, Hasanuddin University, Makassar, Indonesia
*Corresponding author. Email: miftahidris86@gmail.com
Corresponding Author
Miftah Idris
Available Online 19 December 2023.
DOI
10.2991/978-2-38476-152-4_142How to use a DOI?
Keywords
Prudential; Policy; Non-Performing Loan; Credit Risk
Abstract

Non-Performing Loans (NPLs) refer to loans or credit that have passed a certain time limit without expected interest or principal payments. However, the main challenge faced by NPLs is that they can trigger a domino effect that is detrimental to overall economic stability. This study uses a conceptual approach and a case approach in solving research problems. The results show that prudential policies have an important role to face the challenges of NPLs. The prudential policy actively seeks to prevent the accumulation of NPLs by encouraging financial institutions to adopt responsible and sustainable lending practices. Through rules and guidelines set by regulators, financial institutions are directed to carry out more stringent credit evaluations, minimize credit risk, and ensure that their credit portfolios are well diversified. This arsenal of prudent policies illustrates the comprehensive approach taken by regulators and central banks in preventing NPLs. By synergistically using these various tools, prudential policies serve as a strong shield to maintain the stability and integrity of the financial system. Macroprudential measures are a crucial foundation in maintaining financial system stability and addressing systemic risks originating from NPLs.

Copyright
© 2023 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the International Joint Conference on Arts and Humanities 2023 (IJCAH 2023)
Series
Advances in Social Science, Education and Humanities Research
Publication Date
19 December 2023
ISBN
978-2-38476-152-4
ISSN
2352-5398
DOI
10.2991/978-2-38476-152-4_142How to use a DOI?
Copyright
© 2023 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Miftah Idris
AU  - Hasbir Paserangi
AU  - Padma D. Liman
AU  - Oky Deviany
PY  - 2023
DA  - 2023/12/19
TI  - Navigating Risk and Resilience: Exploring Prudential Policies for Proactive Prevention of Non-Performing Loans (NPLs)
BT  - Proceedings of the International Joint Conference on Arts and Humanities 2023 (IJCAH 2023)
PB  - Atlantis Press
SP  - 1403
EP  - 1413
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-152-4_142
DO  - 10.2991/978-2-38476-152-4_142
ID  - Idris2023
ER  -