<![CDATA[This study aims to analyze the cliff effect phenomenon on the asset quality of Rural Banks (BPR) following the termination of the Financial Services Authority's (OJK) credit restructuring policy. Employing a descriptive quantitative approach, this study utilizes year-on-year trend, comparative, and pre-post policy analyses to identify structural changes in the Non-Performing Loan (NPL) ratio through discontinuity analysis before and after the revocation of POJK No. 11/POJK.03/2020 in March 2024. The data utilized consist of the published financial statements of BPR ABC for the 2020–2024 period. The results indicate a structural discontinuity across three phases. The average NPL during the full relaxation phase (2020–2022) at 5.67% spiked in two waves, reaching 9.79% in 2023 and 15.47% in 2024. This total increase of 9.80 percentage points indicates a cliff effect. These findings demonstrate that countercyclical policies can create distortions in risk signals, potentially misleading decision-making processes. This study provides significant implications for regulators and bank management in designing more adaptive risk mitigation policies.]]>
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