The Effect of Ta'widh, Financing Restructuring, and Downgrade on the Non-Performing Financing (NPF) Ratio in Murabahah KUR Financing at Bank Syariah Indonesia in Aceh Province

Studies Management and Finance Economics, of Journal 0504-2644 (online): ISSN 0490,-2644 (print): ISSN 5202 December 12 Issue 80 Volume 8.317 Factor: Impact ,32-i12-10.47191/jefms/v8 DOI: Article 9478-7890 No: Page JEFMS, Volume 08 Issue 12 December 2025 www.ijefm.co.in Page 7890 The Effect of Ta'widh, Financing Restructuring, and Downgrade on the NonPerforming Financing (NPF) Ratio in Murabahah KUR Financing at Bank Syariah Indonesia in Aceh Province Dimas Hanif Nofaryunanto1, Muhajirin2, Muhammad Fadlillah Fauzukhaq3, Novrianto4 1,2,3,4State Islamic University Syarif Hidayatullah Jakarta, Indonesia. ABSTRACT: Objective: This study aims to empirically analyze the effect of ta'widh, financing restructuring, and downgrade on the NonPerforming Financing (NPF) ratio of Murabahah KUR financing at Bank Syariah Indonesia (BSI) in Aceh Province. Methodology: This study uses a quantitative approach with time series data from 2021 to 2024. Multiple linear regression and Vector Autoregression (VAR) analyses were used to test the hypotheses. The data were sourced from BSI Aceh's internal reports, which included monthly NPF ratios, ta'widh realization, restructuring volume, and downgrade cases. Findings: The results show that downgrades have a significant positive effect on the NPF ratio (coefficient = 2.118, p-value = 0.0000), while ta'widh and restructuring do not show a significant partial effect. Simultaneously, these three variables significantly explain 96.19% of the variation in NPF (R² = 0.9619). VAR analysis confirms that ta'widh and financing restructuring do not have a dominant effect on NPF fluctuations. Originality: This study integrates three risk management variables into a single model in the unique context of Aceh, where full implementation of Islamic finance is mandated by local regulations (Qanun LKS No. 11/2018). Practical Implications: Banks should focus on early detection and prevention of declining collectibility rather than relying too much on restructuring or ta'widh mechanisms. Strengthening monitoring systems, customer assistance, and early warning systems is essential to maintain financing quality. KEYWORDS: Rating Downgrade, Murabahah KUR, NPF, Restructuring, Ta'widh, Aceh Sharia Bank. I. INTRODUCTION Bank Syariah Indonesia (BSI) is the largest Islamic bank in Indonesia, resulting from the merger of three state-owned Islamic banks. BSI has an extensive network of offices throughout Indonesia, including in Aceh Province, which plays an important role in the distribution of Islamic financing in the province. As one of the largest distributors of KUR based on Islamic principles in Indonesia, BSI also has a significant KUR portfolio in various regions, including Aceh. The distribution of KUR through Islamic principles at BSI in Aceh Province has its own characteristics, considering the local context and the application of Islamic law in Aceh. The quality of financing is a key indicator of the health of Islamic banks, especially in the distribution of People's Business Credit (KUR), which is dominated by murabahah contracts. Figure 1. BSI KUR financing quality based on financing contract schemes In Aceh Province, all financial transactions must use Islamic financial institutions based on Qanun Aceh No. 11 of 2018. Bank Syariah Indonesia (BSI) as the main distributor of sharia KUR in Aceh faces challenges in managing financing risks, as reflected in The Effect of Ta'widh, Financing Restructuring, and Downgrade on the Non-Performing Financing (NPF) Ratio in Murabahah KUR Financing at Bank Syariah Indonesia in Aceh Province JEFMS, Volume 08 Issue 12 December 2025 www.ijefm.co.in Page 7891 the Non-Performing Financing (NPF) ratio. Ta'widh (loss compensation), financing restructuring, and collectibility downgrades are three important instruments in financing risk management. However, the effectiveness of these three instruments in reducing NPF in murabahah KUR financing still needs to be examined empirically, especially in regions with specific characteristics such as Aceh. Previous studies tend to examine these variables separately and in a more general context. Figure 2. Trend of NPF percentage, Ta'widh, financing restructuring & downgrade from 2021 to 2024 This study aims to analyze the simultaneous and partial effects of ta'widh, restructuring, and downgrade on NPF in murabahah financing at BSI Aceh. The findings of this study are expected to provide practical contributions to improving financing risk management and enriching the literature on Islamic economics. II. LITERATURE REVIEW 2.1. Murabahah Financing and NPF Risk Murabahah is a sales contract with an agreed margin, dominating sharia KUR financing because it provides income certainty for banks and structural ease for MSMEs (Ismail, 2011). However, this financing still contains the risk of default, which has an impact on increasing NPF. 2.2. Ta'widh in the Sharia System Ta'widh is compensation for actual losses due to late payments, regulated in DSN-MUI Fatwa No. 43/2004. Unlike penalties (gharamah), ta'widh is restitutive in nature and is not intended as a means of disciplining customers (Antonio, 2001). 2.3. Financing Restructuring Restructuring is an adjustment of financing terms to help customers who are experiencing payment difficulties (SEOJK No. 16/2020). Its effectiveness is highly dependent on the customer's business conditions after restructuring (Rahmawati, 2021). 2.4. Collectibility Downgrade Downgrade is a decline in financing quality based on collectibility assessment (POJK No. 16/2014). This variable directly contributes to the NPF calculation and is often an early indicator of non-performing financing (Sari & Putra, 2022). 2.5. Previous Research Previous studies (Fadilah, 2020; Rahmawati, 2021; Sari & Putra, 2022) examined these variables separately. This study presents novelty by integrating the three variables into one model and focusing on the context of Aceh after the implementation of the Qanun LKS. III. METHOD 3.1. Type and Source of Data This study uses quarterly time series secondary data for the 2021–2024 period from BSI Aceh's internal reports. The variables studied are: • Y: NPF ratio of murabahah KUR financing (%) The Effect of Ta'widh, Financing Restructuring, and Downgrade on the Non-Performing Financing (NPF) Ratio in Murabahah KUR Financing at Bank Syariah Indonesia in Aceh Province JEFMS, Volume 08 Issue 12 December 2025 www.ijefm.co.in Page 7892 • X₁: Ta'widh (realized value of ta'widh relative to total KUR) • X₂: Restructuring (outstanding restructuring to total KUR) • X₃: Downgrade (financing with reduced collectibility to total KUR) 3.2. Analysis Method Multiple linear regression analysis with the following model: 𝑌 = 𝛼 + 𝛽1𝑋1+ 𝛽2𝑋2+ 𝛽3𝑋3+ 𝜀 Classical assumption tests (normality, multicollinearity, heteroscedasticity, autocorrelation) were conducted to ensure the reliability of the model. Vector Autoregression (VAR) analysis was used to examine the dynamic relationship between variables. IV. RESULTS AND DISCUSSION 4.1. Descriptive Statistics The data shows a downward trend for NPF (from 5.10% in TW I-2021 to 3.60% in TW IV-2024) and downgrades (from 9.50% to 7.60%). Meanwhile, ta'widh and restructuring experienced a gradual increase. 4.2. Multiple Linear Regression Results The regression equation obtained: 𝑁𝑃𝐹 =0.8312+1.1262𝑋1+0.3426𝑋2+2.1178𝑋3 • Ta'widh (X₁): positive coefficient not significant (p=1.126) • Restructuring (X₂): positive coefficient not significant (p=0.342) • Downgrade (X₃): highly significant positive coefficient (p=2.118) The R² value = 0.9619 indicates that the model is able to explain 96.19% of the variation in NPF. 4.3. Hypothesis Testing • t-test: Only downgrade has a significant effect on NPF. • F-test: All three variables simultaneously have a significant effect (F-statistic=126.3545; p=0.0000). 4.4. VAR Analysis and Impulse Response Function (IRF) The VAR results confirm that downgrades provide the strongest response to shocks in NPF. The IRF shows that shocks in downgrades cause an increase in NPF that lasts for several periods. 4.5. Discussion The finding that ta'widh is insignificant is in line with its nature as merely a compensation for losses, not a risk control tool (DSNMUI, 2004). Insignificant restructuring indicates that this effort often only delays the problem if it is not accompanied by fundamental improvements in the customer's business. A highly significant downgrade reinforces the theory that a decline in collectibility is a direct indicator of problematic financing. In the context of Aceh, where KUR financing is dominated by murabahah, downgrades become a crucial early warning signal for risk management. 4.6. Implications 4.6.1. Managerial Implications BSI Aceh needs to strengthen its early warning system to prevent downgrades. Restructuring should be accompanied by business assistance and re-evaluation of feasibility. Ta'widh should be viewed as part of administrative procedures, not as the main strategy for reducing NPF. 4.6.2. Policy Implications Regulators may consider more comprehensive restructuring guidelines, including mandatory business recovery analysis. Local governments need to strengthen the MSME support ecosystem to mitigate the risk of downgrades from upstream. V. CONCLUSION Based on the research results, it can be concluded that simultaneously, the three variables of ta'widh, restructuring, and downgrade have a significant effect on the NPF ratio, indicating that the management of Sharia KUR financing risks cannot be separated from one another. The very high coefficient of determination (R²) also shows that the model used in this study has a strong ability to explain the variation in the NPF ratio in murabahah financing for KUR at BSI Aceh. 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