The Effect of Modication of Technology Monitoring on Relationship Between Corporate Governance, Credit Monitoring, and Npl

Purpose: This study aims to examine whether there is a moderation effect of Technology Monitoring in the relationship between Corporate Governance and Credit Monitoring variables on the drivers of NPL. Design/Method: This research is a quantitative research. The data in this study are a combination of primary data obtained through questionnaires and also secondary data obtained from bank credit portfolios. The research took place at the Micro Branch Oce of Bank Mandiri in Central Java Region with the head of the branch oce as a sample in this study. The sampling technique used is Judgment Sampling and data analysis using SEM. Findings: The results showed that Corporate Governance had a positive and signicant effect on Credit Monitoring, Corporate Governance had a negative and signicant effect on NPL, Credit Monitoring had a negative and signicant effect on NPL Technology Monitoring had a positive and not signicant effect in moderating the relationship between Corporate Governance on NPL and the inuence of Technology Monitoring a positive and signicant effect in moderating the relationship between Credit Monitoring for NPL. Originality: The originality of this research lies in testing the effect of Corporate Governance and Credit Monitoring on Non-Performing Loans with the updating of Technology Monitoring as a moderating variable.


Introduction
The implementation of Corporate Governance (CG) in the banking world has increasingly developed in the last few decades. The world of credit, which is the pulse of the banking industry, is also growing due to the development of the "hedonism" lifestyle and the rapid globalization. Responding to these developments, each bank has now begun to change the mindset in implementing CG. Currently every bank has superior jargon in implementing a complete CG such as the ASEAN Corporate Governance Scorecard and Whistleblowing System.
The Bank does not only take preventive actions against bad loans at the beginning of the transaction through CREDIT MONITORING, but also takes curative actions during the credit period through Credit Monitoring. Credit Monitoring is not only a focus for banks, other companies also have a Credit Monitoring system to control their corporate debt. Sometimes a company still has assets that still bear the debt that needs to be monitored so as not to become a loss in the future. Regulations (OJK, 2017) also require the Risk Management Committee to take part in Credit Monitoring (OJK, 2017).
Banks as the main movers of credit certainly have a special division in conducting Credit Monitoring. The division is tasked speci cally to carry out monitoring actions on all bank creditors and take special preventive measures against creditors who have an indication of bad credit. As one element in the bank structure, Credit Monitoring cannot be released from CG. The choice of preventive, supervisory and non-performing loan enforcement methods must be based on the corporate governance system. So that the quality of CG of an organization / banking also gives a role to the quality of the credit monitoring itself.
The problem of Non performing Loan (NPL) is a big challenge for the banking world because since the banking restructuring program began, the ratio of Non performing Loan (NPL) has been di cult to achieve the ideal number. If banks are able to reduce the ratio of Non performing Loan (NPL), the potential bene ts to be gained will be even greater because banks will save money that will be needed to back up Non performing Loan (NPL) losses.
The object of research in this study is PT Bank Mandiri (Persero) Tbk. The high NPL at PT Bank Mandiri (Persero) Tbk, can have a large impact on the sustainability of the company. According to the FSA regulation No. 42 / POJK.03 / 2017 concerning bad loans, the highest limit of NPLs at banks is 5%. If the limit is exceeded, the bank must reduce the amount of credit granted. The reduction in the amount of credit certainly has an impact on the decline in bank income from the credit sector. In addition, the high NPL also increases the risk for the bank's capital availability. Therefore, steps must be taken to reduce the risk of PT Bank Mandiri (Persero) Tbk's NPL, going forward.
Some previous studies such as Ko This study also revealed that Technology Monitoring provides a moderating role that increases the in uence of CG and Credit Monitoring variables on NPL. No previous research has been found that tested the moderation of Technology Monitoring on the in uence of CG and Credit Monitoring on NPLs as well as being novelty in this study.

Literature Review and Hypotheses Development
This research uses Financial Intermediation Monitoring Theory. The Financial Intermediation Monitoring Theory (Diamond, 1984) states that optimal oversight by stakeholders in company positions can minimize the risk of investment. Diamond also added that delegated monitoring conducted by the company is one way to reduce monitoring cost without sacri cing the effectiveness of supervision.
Corporate governance according to The Indonesian Corporate Governance Manual (OJK, 2017) issued by the Financial Services Authority is a system of relationships within companies that are governed by structures and processes. Corporate governance refers to the way companies are governed and for what purpose. It identi es who has power and accountability, and who makes decisions. This, in essence, is a tool that allows management and the board to deal with company matters more effectively. Corporate governance ensures that business policies have the right decision-making and control processes so that the interests of all stakeholders (shareholders, employees, suppliers, customers and society) are balanced. Governance at the company level covers the process in which company objectives are set and implemented in context social environment, regulations and markets. This relates to practices and procedures to ensure that the company is run in such a way as to achieve its objectives, while ensuring that stakeholders can have con dence that their trust in the company has been carried out properly.
The biggest asset of a bank is credit. 80 percent of assets from banks are credit. Credit needs to be monitored because it requires a long process, so monitoring and coaching is needed. Some risks include: rising interest rates, in ation, changes in the value of a currency against foreign currencies. Nonperforming loans do not happen suddenly. Monitoring is a tool to monitor credit to prevent irregularities. Monitoring is needed because the magnitude of the impact of credit quality (collectibility) on the continuity of bank business, can prevent problems from becoming larger, and because every process of asset conversion can be exposed to potential risks. This risk exists in every form and type of activity, including in the process of bank branch activities. It's just that the intensity of the risk is different in each form and type of activity. These risks must be anticipated so that the negative impact on credit can be minimized. There will not be a sudden bad credit if the stages in the crediting process are followed properly. If a bank has been monitoring well, it means that the bank has run an early warning system, where early detection is carried out to nd out indications that are potential risks for bank credit. Indications of deviation can be detected through several types of monitoring. The more e cient type of monitoring depends a lot on the use of manpower, time, cost, and risk faced because banks will always consider this. These indications are deviations from the terms of lending, which is essentially the provisions of the monetary authority, bank provisions, prerequisites / conditions, and the results of negotiations between the bank and the customer.
Non performing loan according to Rottke and Gentgen (2008), is a permanent phenomenon that is present in neCredit Monitoringa banks and other lending institutions. Increasing credit poses signi cant problems for neCredit Monitoringa banks and the emergence of market Non Performing Loan (NPL) is a temporary phenomenon. In this study, the analysis of the relationship between cost e ciency and NPL is ambivalent. The higher the NPL-volume the lower the cost of e ciency. However, it can also cause an increase in bad loans. According to Ozili (2019), NPL is important because it re ects the credit quality of the bank's portfolio, and in the collection of regulations re ects the credit quality of the bank's portfolio in the country. Understand policies that affect the level of risk and no nancial risk is not responsible for nancial risk.

Research methodology
This research is a quantitative research. The data in this study are a combination of primary data obtained through questionnaires and also secondary data obtained from bank credit portfolios. This research was conducted at Bank Mandiri in the Jawa Tengah Province. Research data were collected from Bank Mandiri branch o ces. The sampling technique used in this study is Judgment Sampling where the sample is chosen based on certain criteria. The population in this study were all 7 areas of Bank Mandiri in the Jawa Tengah Region. The criteria used are micro branch o ces (KCM) in 3 areas with the largest loan portfolio in Jawa Tengah. Table 1 shows the size of the loan portfolio per area in Bank Mandiri in Jawa Tengah Region. From this table, it can be seen that the Semarang area loan portfolio is the largest contributor to the portfolio with a total portfolio of Rp 2,467 trillion, followed by the Solo area with a portfolio of Rp 1,884 trillion and the Kudus area with Rp 1,784 trillion. Seeing from this explanation, the Semarang, Solo and Kudus areas are sampled in this study. Data will be analyzed using SEM technique. The use of SEM method is based on the reason SEM has an advantage in con rming the relationship theory between variables contained in the structural model and or testing the relationship between variables whose theoretical basis is weak or even does not yet exist.

Model Measurement
The following is a summary of the average indicator and outer loading of each indicator.   Table 3 shows the results that all manifest indicators in this study were signi cant. After measuring the research model of each variable, it is necessary to measure the Goodness of t of the model under study.

Goodness of Fit
Model feasibility test or Goodness of Fit testing the suitability / suitability of the model with the research data owned. Goodness of t in question is an index or measure of the goodness of relationships between variables. Table 4 summarizes the results obtained in the analysis and the recommended values for measuring the feasibility of the model. Based on the results of the overall model feasibility testing all criteria have reached the expected value limit or have met the critical limits of the recommended Goodness of t indices, so that the results of this modeling can be accepted or worthy of analysis.  Table 5. The results of Table 5 show that the Effect of Corporate Governance (X1) on Non-Performing Loans (NPL) (Y2), obtained a structural coe cient of -0.53 and p-value <0.001. Because the p-value <0.05, and the coe cient marked negative indicates that there is a signi cant and negative in uence between Corporate Governance (X1) on Non-Performing Loans (NPL) (Y2), meaning that the higher the Corporate Governance (X1), will reduce the value of Non-Performing Loans (NPL) (Y2). Thus, hypothesis 2 of this study was accepted.
The results of this study are in line with Tarchouna (2017) stating that corporate governance can in uence decision making towards risky investments. Credit is a way for banks to invest capital that is owned despite high risk. Saada (2017) states that good corporate governance of a bank can make it easier for banks to supervise bad loans. The results of the study show that corporate governance in the micro branches of Bank Mandiri in Jawa Tengah is a signi cant factor in determining the level of NPL. As a credit provider, Bank Mandiri wants a low level of NPL so as not to cause losses. In order to reduce the rate of NPLs, Bank Mandiri needs to increase Responsibility as the main factor in the Corporate Governance variable in order to reduce the level of NPL.

H3: Credit Monitoring has a signi cant effect on Non-Performing Loan (NPL)
The results from Table 5    This study aims to provide input to company management, especially banks in order to improve corporate governance and provide input to the banking world in developing policies to reduce the rate of NPL. This research is also expected to assist Bank Mandiri in determining the right and appropriate policies in providing credit to customers. Direct Effect