Bank Competition and Stability: Evidence from Rural Banks in Bali

Fridayana Yudiaatmaja, Igb Wiksuana, Nlp Wiagustini and Ibg Sedana
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Fridayana Yudiaatmaja: Faculty of Economics and Business, Universitas Udayana, Bali, Indonesia
Igb Wiksuana: Faculty of Economics and Business, Universitas Udayana, Bali, Indonesia
Nlp Wiagustini: Faculty of Economics and Business, Universitas Udayana, Bali, Indonesia
Ibg Sedana: Faculty of Economics and Business, Universitas Udayana, Bali, Indonesia

Review of Applied Socio-Economic Research, 2022, vol. 23, issue 1, 48-59

Abstract: The relationship between competition and stability is widely understood by researchers with two different perspectives, namely competition-fragility and competition-stability. A lot of research has been conducted regarding the relationship between competition and stability in the banking sector but has not specifically examined the stability of the classic model of rural banks. The purpose of this study was to empirically examine the effects of rural banks' competition and stability based on the aspects of capital, earning asset quality, profitability and liquidity. The indicators used in this study are adjusted to the characteristics of rural banks and existing regulations. The results of the study indicate that the competition variable has a significant positive effect on the stability of rural banks, and supports the view of competition stability.

Keywords: Banking Stability; Competition; Financial Crisis; Rural Banks (search for similar items in EconPapers)
JEL-codes: G01 G21 (search for similar items in EconPapers)
Date: 2022
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