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This study aims to analyze the level of accuracy of financial distress prediction models and to test the ability of liquidity risk ratio, credit risk and capital ratio in predicting the possibility of financial distress in rural banks (BPR) in Indonesia. The data used is sourced from secondary data and collected from BPR's financial statements published on the Financial Services Authority (OJK) website during the 2014-2023 period. The population in this study is all rural banks as many as 1,402 rural banks and the number of samples is 312 rural banks spread throughout Indonesia. Determination of samples by the Slovin method by proportionate stratified random sampling technique. The results of the study that the liquidity risk ratio, credit risk and capital ratio in predicting financial distress can be used with an accuracy rate of 95.90%. Liquidity risk ratio and credit risk ratio have a positive and significant effect, capital ratio and primary ratio have a negative and significant effect, while capital adequacy ratio has a positive and significant effect on the possibility of financial distress in rural banks in Indonesia. [ABSTRACT FROM AUTHOR]

The Rural Bank (BPR) plays a crucial role in the Indonesian banking industry, particularly at the regional level, serving as an alternative financing source for the unbankable population. This research aims to analyse the productivity levels of BPRs in East Java using the Malmquist Productivity Index (MPI) during the period from 2016 to 2022. The study sample comprises 30 BPRs in East Java. The analysis results indicate that the productivity of BPRs in East Java fluctuates from year to year. Moreover, during the COVID-19 pandemic, BPR productivity experienced a significant decline. The study provides recommendations for BPR management and regulators to pay more attention to BPR productivity and decision-making foundations. [ABSTRACT FROM AUTHOR]

Improvement of every financial institution is based on the quality of service they provide. In the Philippines, most bank’s clients prefer financial institutions that render quality service. With resurgence of interest and need for effective delivery of service, this study aimed to determine the effectiveness of service provided by selected rural banks in terms of tangibility, responsiveness, reliability, empathy and assurance. It utilized descriptive method and selected two hundred client-respondents through quota sampling. The results showed significant differences in empathy, reliability, responsiveness and assurance when grouped according to sex, kind of service availed and monthly income. However, no significant difference was found when the five dimensions are grouped according to age and civil status. The results further revealed that the company is highly effective in providing quality service in terms of assurance and reliability, and effective in terms of tangibility, responsiveness, and empathy. From the assessments of customer experience, the banks need to provide more modernized facilities for better services, furnish more pamphlets and promotional tools to educate clients on the bank regulations, new products or services catered, and improve facilities by providing additional seats and reading materials while clients are waiting for their transactions.

This study aims to review effect of switching costs on rural bank market power. This study is using dynamic panel regression of the Generalize Method of Momments (GMM). This paper used panels of 1266 Rural bank and 113 Sharia Rural bank during 2013-2019. To further analyze this study using Lerner Index as proxies of market power, Bertrand Competitions models as proxies of switching costs and banking indicators covering bank size, equity, non-interest income, and the burden of allowance for productive assets (Lost Loans Provision). The results show that switching costs have a significant positive effect on conventional rural bank and negatively affect sharia rural banks market power. This condition is caused by various reasons, namely the limited choice of rural banks so that consumers survive the switching costs charged. Meanwhile, in sharia rural bank transparency is clearly seen on the side of mudharobah and musyarakah which makes it unable to increase financing margins freely. [ABSTRACT FROM AUTHOR]

The urgency of the internal model of default credit for the rural bank in Indonesia is increasing due to the recent acceleration of the increase in Non-Performing Loans at rural banks. This research will formulate an internal model of default credit that can reduce the level of default risk in rural banks based on the explanatory sequential design of mixed research method. The findings of quantitative analysis integration by Chi-Square Analysis, Discriminant Analysis, and Logistics Regression analysis at BPR BKK Pekalongan Regency in 2021 will be explored further by qualitative research. Using nine variables that affect debtors' failure, this study finds that the interest rate is a variable that consistently affects the status of default loans using the integration of 3 analyses and qualitative analysis. The study results indicate that rural banks need to pay more attention to determining credit interest rates when prospective debtors apply for credit. The determination of interest rates is related to compensation for risks faced by rural banks in connection with asymmetric information about the debtor's ability to pay while considering the interest rate determined by the IDIC. [ABSTRACT FROM AUTHOR]

Previous studies analyzing the relationship between the performance of rural banks and the COVID-19 pandemic are very limited in number. This study aims to find out how the impact of the COVID-19 pandemic on the performance of rural banks in Indonesia. This study uses panel regression data to examine the effect of the COVID-19 pandemic on the capital adequacy ratio (CAR) from the capital aspect, non-performing loan (NPL) from the asset quality aspect, return on assets (ROA) from the earning aspect, and cash ratio (CR) from the aspect of liquidity. Our findings explain that the COVID-19 pandemic has a positive effect on CAR and NPL, a negative effect on ROA, and no effect on CR. [ABSTRACT FROM AUTHOR]

Two-thirds of the world’s poorest and vulnerable, mostly women, live in rural areas, engaging in subsistence agriculture. Hence, in Ghana, rural banking was introduced to provide microcredit services to the marginalised neglected by commercial banks. One of such banks is the Sonzele Rural Bank in Jirapa was set up to offer credit services to improve the living condition, yet poverty in Jirapa is still high. This study, therefore, sought to investigate the role of rural banks in poverty reduction drawing evidence from the Sonzele Rural Bank in Jirapa. Using a cross-sectional design, the study employed structured interviews to collect data. The cluster sampling technique was used to select thirteen women’s groups in Jirapa, and purposive sampling enabled the selection of four project staff. Paired-samples t-test and Kendall’s coefficient of concordance were employed in the analysis. The study revealed that credit with education was given to women in groups which enabled them to set up various enterprises and experienced an increase in income and expenditure on education and health thus, reducing poverty in the area. Beneficiaries noted that the issues of high-interest charges, short repayment schedules and absence of insurance policy need attention to make credit a poverty reduction tool. [ABSTRACT FROM AUTHOR]

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This study investigates the existence of monetary policy transmission via bank lending channel on Indonesian rural banks that located across provinces. The datasets consist of 1860 rural banks that located in 34 provinces in Indonesia. Using the dynamic system generalized method of moments (GMM) estimations, the empirical results indicate that monetary transmission via bank lending channel works on rural bank in Indonesia. When the central bank of Indonesia tightening the monetary policy, the lending channeled by rural banks reduce, and vice-versa. Our findings implies that the transmission of monetary policy via bank lending channel is remain strong policy provided by central bank. [ABSTRACT FROM AUTHOR]

We investigate the extent of credit risk management in the leading Indonesian Microfinance Institution (MFI's): rural bank. Specifically, we focus on the role of diversification, capital buffer, and ownership on the probability of incidence and trajectory of two credit risk proxies—loan loss reserve to non-performing loan ratio (LLR_NPL) and net non-performing loan to total loan ratio (NPL_Net). Proportional hazard parametric exponential regression and Kaplan Meier survival function are applied to a balanced panel dataset of 852 rural banks from June 2010 to March 2019 (30672 bank quarter observations). We find that credit risk began to surface between 16–23 quarters. Government ownership and funding diversification positively impact credit risk management. A different nature of credit risk proxy (LLR_NPL versus NPL_Net) significantly affects the role of capital buffer, type of ownership, and credit risk trajectory. Our study has highlighted the importance of coordinated regulatory-supervisory practices especially for rural banks owned by cooperatives. [Display omitted] • Credit risk began to surface between 16–23 quarters. • Government ownership and funding diversification positively impact credit risk management. • A different nature of credit risk proxy (LLR_NPL versus NPL_Net) significantly affects the role of capital buffer, type of ownership, and credit risk trajectory. • Improved coordination is required since businesses are all the same, that is, rural banks. They should submit to the same regulatory and supervisory regime. [ABSTRACT FROM AUTHOR]