Study on empirical characteristic of rural bank sustainability in Indonesia

Muljanto Moechdi, Munawar Ismail, Candra Fajri Ananda and Ahmad Erani Yustika

International Journal of Monetary Economics and Finance, 2016, vol. 9, issue 4, 363-378

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. (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmefi:v:9:y:2016:i:4:p:363-378

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