Indonesia's banking credit growth had weakened before the COVID-19 pandemic. The pandemic worsened the situation. Banks are still reluctant to extend loans although Bank Indonesia has cut the policy rate aggressively and implemented other measures to boost banking credit. We investigate the supply and demand-side problems in Indonesia's banking sector, before and during the COVID-19 pandemic. Our study goes into the provincial level to examine local-specific factors that together with the national-level and international-level factors are responsible for the problems in Indonesia's banking sector. We construct pooled and panel data models for our study.

JEL codes: G21, E52