Power distance and gender gap perception on the credit risk of rural banks: study of social and economic mission of Indonesian rural banks

Yavida Nurim, Nung Harjanto, M. Yudhika Elrifi, Indrian Supheni, Nur Rizki Wijaya and Angelia Pribadi

International Journal of Monetary Economics and Finance, 2025, vol. 18, issue 2/3, 165-175

Abstract: The Indonesian government has been trying to accommodate the needs of the micro, small, and medium enterprises (MSMEs) for legal financing. Indonesian rural banks (IRBs) as private bank - have social and economic missions to accommodate it. Consequently, a good relationship between the IRB's management and its customers, namely MSMEs, impacts its financial performance. It is built from organisational culture, such as power distance and gender equity. This study uses primary data from a questionnaire and secondary data from IRBs' financial reports for 2016-2019. The smaller the gap between superiors and subordinates and the smaller the gap between genders will decrease the credit risk. A good atmosphere in an organization encourages the members to pursue the organisation's goal rather than the individual's. This study contributes to the cognitive social theory, namely the social environment around individuals, which plays a role in cognitive development and individual behaviour.

Keywords: power distance; credit risk; IRB; Indonesian rural bank; gender equality; social mission. (search for similar items in EconPapers)
Date: 2025
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