Analysis of the Implementation of Internal Control Systems in Minimizing the Risk of Non-Performing Loans in Commercial Banks

Joko Purnomo; Diana Elvianita Martanti

doi:10.55927/eajmr.v5i6.202

Authors

Joko Purnomo Islamic University of Balitar
Diana Elvianita Martanti Islamic University of Balitar

DOI:

https://doi.org/10.55927/eajmr.v5i6.202

Keywords:

internal control, COSO, non-performing loans, credit risk, banking

Abstract

This study aims to analyze the implementation of internal control systems to minimize the risk of non-performing loans in commercial banks. The study used a qualitative approach with a case study method. Data were obtained through in-depth interviews, observation, and documentation with key informants consisting of Account Officers, Credit Managers, and Internal Auditors at commercial banks. Data analysis used the Miles and Huberman interactive model. The results show that an internal control system based on the COSO framework has been implemented, but is not yet fully effective. The main weaknesses lie in risk assessment and credit monitoring. Contributing factors include pressure on credit distribution targets, limited human resources, and weak post-disbursement supervision. This study contributes to enriching empirical studies related to banking internal control and provides strategic recommendations for improving the quality of credit risk management.

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