Analysis Of Financial Distress And Its Correlation To Gross Regional Domestic Product (Grdp) During And After The Covid-19 Pandemic (Case Study Of Regional Development Bank In Java Island, Indonesia)

Abstract

Financial performance applies to the financial condition of an industry in a given period. Financial distress refers to a situation of decline in an industry’s financial status before the point of bankruptcy. The objective of the research is to utilize the Altman Z-Score approach to assess the financial performance and find its correlation to Gross Regional Domestic Product (GDRP) during and after the COVID-19 pandemic for five regional development banks in Java Island. This research uses secondary data obtained from annual reports of all banks and Indonesia's Central Statistics Agency from Q2 2020 until Q1 2023. Based on the calculated outcomes, all banks faced failure in all periods. Meanwhile, the correlation using Rank Spearman of Altman Z-Score with Gross Regional Domestic Product (GDRP) is varied for every bank. The correlations are significantly negative for Bank DKI, insignificant for Bank BJB, significantly positive for Bank Jateng and Bank DIY, and insignificant for Bank Jatim.