The Concept of Welfare State in Indonesia as a Strategic Move to Win People Trust Through Economic Sustainability: Good Governance and Bank Conduct on Bank Debt Cancellation Due to Natural Disasters

Abstract

Natural disasters are unavoidable events for any country and they may carry impacts on debts extended by banks to their debtors/customers. Bad debts due to natural disasters are categorized as force majeure that may result in cancellation. Such concept of debt cancellation is part of credit risks in the form of losses that banks have provided reserves for, whereas to be eligible the problem debtor must be directly affected by the disaster.In a philosophy of welfare state, the real practice of debt cancellation for those directly affected by disasters shall nurture trust value to the government of its country, where the government will then be seen as the people’s savior. In addition, not only initiate trust to the government but especially also nurturing trust towards the banks. The bank’s strategic role is as an institution providing money for funding and investments to invigorate people to expand their businesses. Having nurturing trust issues as the foundation of good conduct both in government and bank shall affect to the future more investment back to the bank which as result build a more sustainable people economy power as a strong national economic under the lead of good government.

DOI: 10.5901/mjss.2014.v5n20p2498