International Journal of Multidisciplinary Research and Development

International Journal of Multidisciplinary Research and Development


International Journal of Multidisciplinary Research and Development
International Journal of Multidisciplinary Research and Development
Vol. 5, Issue 11 (2018)

Determinant of financial performance of rural banks in Indonesia


Yusri Ilyas, Eka Sutisna, Hery Erdi

Rural banks (BPRs) are one of the financial institutions that play an important role in the economic development in Indonesia; particularly in the increasing productivity of the real sector, especially for micro, small and medium enterprises. While the existence of BPRs in the midst of domination of commercial banks is widely regarded necessary, many BPRs experience difficulties in enhancing their financial performance. The purpose of this study is to examine the factors potentially influence the financial performance of BPRs operating in Jakarta province. The results of this study indicate that the loan to deposit ratio has no significant effect on the financial performance of BPRs operating in the province. Furthermore, it was found that the ratio of non-performing loans had a negative and significant effect on the financial performance of conventional rural banks. The capital adequacy ratio had a positive and significant effect on the financial performance of conventional rural banks. Finally, it was found that operating expense ratio has a negative and significant effect on the financial performance of conventional rural banks.
Pages : 133-138