Thesis Proposal Presentation Non Performing Loans in Savings and Loan Cooperatives

Hello everyone, my name is Billy Gurasanjaya. I am a master's student in accounting at the Faculty of Economics, State University of Jakarta. In this presentation, I will present my research proposal entitled The Effect of Internal Control Audit Risk Management Compliance with Credit Standard Opening Procedure and Credit Supervision on Non-Performing Loans in Savings and Loan Cooperatives in East Jakarta. Background one, cooperatives play a significant role as one of the pillars of the national economy in Indonesia. In particular, savings and loan cooperatives are actively involved in credit distribution to their members. However, the higher the credit activity, the greater the exposure to credit risk. Currently, one of the main issues faced is that the level of non-performing loans continues to increase. Background two, empirically, the case of problematic cooperatives has reached approximately 23.9 trillion rupiah, indicating serious financial issues. East Jakarta has the highest of savings and loan cooperatives, totaling 99 cooperatives. This high number reflects intense operational activity which also increases the potential risk of the credit problem. Problems Based on the previous discussion, there are several key issues in credit management. Within savings and loan cooperatives, credit management is not yet optimal as the analysis process is not comprehensive enough, leading to potential errors in assessing borrowers. In addition, internal control systems are still weak, creating opportunities for e-grills. Credit risk management is also not effective as risk identification and monitoring are not carried out systemically. Furthermore, compliance with credit SOP remains slow and credit supervision is not conducted consistently after loan distribution. Overall, the issues indicate that non-performing loans are influenced not only by external factors, but also by weakness in internal management. Research gaps and novelties Previous studies mainly focused on the banking sector and have examined variable separability. While research on savings and loan cooperatives remains limited, therefore, this study offers several contributions. It specifically focuses on cooperative integrative variable stimulation and adopts a perception-based approach due to limited access to non-performing loan data. As a result, this study is expected to provide a more comprehensive understanding and contribute both academically and practically to cooperative credit management. Research Objectives The objective of this study is to analyze the influence of internal cooperative factors on non-performing loans. Specifically, this study examines how internal control audits, credit risk management, compliance with credit SOP, and credit supervision affect the level of non-performing loans. from prevention and control to post-distribution supervision, allowing for a more comprehensive analysis. Theoretical Framework This study is based on three main theories. The first one is agency theory, explaining the potential conflict of interest between cooperative members and management, which may lead to moral hazards. Risk management theory emphasizes the importance of identifying, measuring, and controlling risks. In addition, the CASA Framework provides a conceptual basis for internal control, including control environment, risk management, control activities, communication, and monitoring. Together, these theories explain that non-performing loans are strongly influenced by intracontrol and risk management. This study consists of independent and dependent variables. The independent variables include internal control audits, credit risk management, compliance with credit SOP, and credit supervision. The dependent variable is the level of non-performing loans. These variables represent key aspects of credit management. From system evaluation to supervision, and are analyzed simultaneously to determine their overall impact on non-performing loans. The research model illustrates the relationship between the four independent variables and non-performing loans. Each variable expects to influence the dependent variable conceptually. Stronger internal control, effective risk management, consistent SOP compliance, and proper supervision can reduce the risk of non-performing loans. Therefore, the model tests the simultaneous effects of these variables. This study uses a quantitative approach and is conducted in East Jakarta, which has the highest number of cooperatives totaling 99 units. The population consists of all cooperatives in this area, which is a sample of 30 cooperatives selected using proposed sampling. The respondents include 150 cooperative members and management providing comprehensive data and credit management practices. Data collected through questionnaire using located scale and supported by documentation, a perception-based approach is used to limit access to actual and failed data. The data are analyzed through probability and reliability tests, classical assumption tests, and multiple linear regression analysis to examine both partial and significant effects. In conclusion, non-performing loans are influenced not only by external factors but also by internal factors such as internal control, risk management, SOP compliance, and supervision. Therefore, strengthening credit management is essential to minimize risk. This study is expected to provide practical contributions for improving cooperative credit management and supporting better decision-making. This concludes my presentation. Thank you for your attention and I welcome any feedback and suggestions for further improvement. Thank you everyone. Bye-bye.