Understanding the Complexity of Banking Loan Absorption during Pandemic in Indonesia: A Conceptual Model

Indonesia experienced negative economic growth in the 2nd and 3rd quarters due to the COVID-19 pandemic. One of the government's efforts on economic recovery is the Pemulihan Ekonomi Nasional (PEN) Program. The program includes the placement of government funds in banks which are expected to be absorbed immediately to boost economic growth. The bank carries out its business function as a channel of funds for the people. However, increasing loan fund absorption by the community is arduous and not simple. The dynamic complexity of disbursing funds to the communities adds to the challenge of achieving objectives. One way to address this challenge is by uncovering the disbursing process's complexity, yet it is still got little attention. This paper aims to understand and analyze the complex structure of increasing bank loan absorption in Indonesia. With this aim, this paper contains an analysis of the increase in bank loan absorption with a holistic and systematic approach using a system dynamics approach. Many factors can influence the absorption of bank loans in Indonesian society. Furthermore, rigidity in risk management and technological strength are key factors in the form of bank intervention in increasing the absorption of bank loans but still have their risks to be anticipated.