<![CDATA[Background: Financial distress in banking carries systemic consequences, so its early detection is a central concern for regulators and bank management. Objective: This study examines the effect of credit loss provisions and audit committee characteristics on financial distress in Indonesian banking, and tests whether credit relaxation moderates the relationship between credit loss provisions and distress. Financial distress is proxied by a modified Altman Z″-score adapted to the balance-sheet structure of banks. Methods: The analysis uses a balanced panel of 21 banks listed on the Indonesia Stock Exchange that disclosed restructured-loan data over 2020–2024, yielding 105 firm-year observations, and applies panel regression with a fixed-effect specification selected through the Chow and Hausman tests. Results: Credit loss provisions raise financial distress, while a larger audit committee is associated with higher, not lower, distress, contrary to the governance-based expectation. Credit relaxation has no direct effect but acts as a pure moderator that strengthens, rather than weakens, the influence of credit loss provisions on distress, contradicting the stabilizing intent of the pandemic-era policy. Larger banks are more resilient, whereas rapid credit growth heightens distress. Conclusion: By integrating credit risk, governance, and regulatory intervention within one model, the study offers new evidence that credit relaxation may defer, rather than resolve, the recognition of credit risk, with implications for prudential regulation and bank risk management in emerging markets.]]>
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