Int. J. of Monetary Economics and Finance   »   2016 Vol.9, No.4

 

 

Title: Study on empirical characteristic of rural bank sustainability in Indonesia

 

Authors: Muljanto Moechdi; Munawar Ismail; Candra Fajri Ananda; Ahmad Erani Yustika

 

Addresses:
Faculty of Economics and Business, Department of Economics, University of Brawijaya, Jl. MT. Haryono 165, Malang 65145, East Java, Indonesia
Faculty of Economics and Business, Department of Economics, University of Brawijaya, Jl. MT. Haryono 165, Malang 65145, East Java, Indonesia
Faculty of Economics and Business, Department of Economics, University of Brawijaya, Jl. MT. Haryono 165, Malang 65145, East Java, Indonesia
Faculty of Economics and Business, Department of Economics, University of Brawijaya, Jl. MT. Haryono 165, Malang 65145, East Java, Indonesia

 

Abstract: This study examines the financial sustainability of the Indonesian rural banking industry from 2009:Q1 to 2012:Q3. The study uses the data of 8.104 observations, and is investigated using regression of panel data. The study found that assets, spread of interest rate and capital were the most significant factors influencing the financial sustainability of rural banking industry. Furthermore, a rural bank relying its funding on non-traditional deposits had a stronger financial sustainability. The study also found that, in terms of quality of loan and earning capacity, rural banks that are located in Sumatra region were better than two other regions. However, if the measurement uses a profitability indicator, Java region was better than other regions in the study.

 

Keywords: rural banking; microfinance; financial sustainability; panel data; rural banks; bank sustainability; Indonesia; assets; interest rates; capital; non-traditional deposits; loans quality; earnings capacity; profitability.

 

DOI: 10.1504/IJMEF.2016.080079

 

Int. J. of Monetary Economics and Finance, 2016 Vol.9, No.4, pp.363 - 378

 

Available online: 24 Oct 2016

 

 

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