• The Journal of Asian Finance, Economics and Business
• /
• 제7권9호
• /
• pp.305-314
• /
• 2020

This paper investigates the impact of profit and loss sharing (PLS) contracts on non-performing financing of Islamic rural banks as Islamic small banks focus on small and medium enterprises at province level across country. Our study employs panel data, consisting of 142 Islamic rural banks and using quarterly data from 2013Q1 to 2018Q4, and splits them based on the bank's size and geographical area. Both static and dynamic panel regressions are then applied. The results obviously indicate that a high proportion of profit and loss sharing contracts leads to high financing risk. The large Islamic banks encounter a higher non-performing financing stemming from profit and loss contracts compared to small Islamic banks. Profit and loss contracts also produce higher financing risk for Islamic banks outside Java, as those areas are less developed areas than Java itself. A more efficient Islamic bank is less financing risk. Income diversification lessens the impaired financing and, more particularly, large Islamic banks and Islamic banks located in Java much benefit by diversifying income and financing to lower financing risk. Our study suggests that Islamic rural banks may consider the optimal level of profit and loss sharing contracts to minimize financing risk.

• The Journal of Asian Finance, Economics and Business
• /
• 제8권8호
• /
• pp.497-502
• /
• 2021

This study aims to investigate the determinants of default risk of rural banks in East Java, Indonesia. The method used is descriptive verification and logistic regression analysis. The data used is secondary in the form of monthly annual financial reports of rural banks in East Java during the period 2009-2018. From the results, it was shown that net interest margin (NIM) as a proxy of market risk, non-performing loan (NPL) as a proxy of credit risk, operation efficiency as a proxy of operational risk and return on assets (ROA) as a proxy of profitability have a significant influence on default risk. Meanwhile, the loan to deposit (LDR) ratio as a proxy of liquidity risk has no significant influence on default risk. Banks need to implement risk management and meet the capital adequacy requirements of regulators so that they are resistant to risk, and also, compliant with bank governance to be able to produce high returns for rural banks have an impact on sustainability and its existence. The ability to identify setbacks in bank conditions and the ability to distinguish between healthy and problematic banks will enable to anticipate default banks.

• The Journal of Asian Finance, Economics and Business
• /
• 제7권11호
• /
• pp.657-668
• /
• 2020

This paper investigates the effect of market structure, including some bank-specific variables and macroeconomic conditions, on the profitability of Indonesian Islamic rural banks. We apply the structure conduct performance (SCP) and the relative market power (RMP) hypothesis. Panel data comprising 142 Islamic rural banks from 2013Q1 to 2018Q4 are employed. This study breaks them apart, associated with the level of economic development consisting of Java as developed regions and outside Java as less developed regions. This study employs static and dynamic panel regression. The GMM method, however, is appropriate because of the dynamic nature of profitability. Our results confirm the SCP hypothesis and fail to support the RMP hypothesis. The higher market concentration allows Islamic rural banks to generate a significantly higher profit by conducting a collusive strategy. More interestingly, the collusive behavior may result in more profit for Islamic rural banks located in the developed regions than those in less developed regions. Evidence also highlights the importance of operating efficiency and impaired financing on profitability. High operating efficiency and low impaired financing can improve profit. Our results suggest that capitalizing market share by improving efficiency and optimizing financing contracts between PLS and non-PLS contracts also improve profit.

• The Journal of Asian Finance, Economics and Business
• /
• 제6권2호
• /
• pp.33-44
• /
• 2019

The Indonesian government launched a new people's business credit program as part of a package of economic policy and deregulation. The interest rate is set lower than the average of the current loan interest rates, especially when compared with rural bank interest rates. To capture the social spatial aspects, quota sampling is applied to ten areas that divided based on the social culture. Further, the method utilized in this research is logit models, which designed to analyse the determinants of asymmetric information particularly on the rural bank and small micro enterprises. The study was conducted in East Java as the province with the largest number of rural banks in Indonesia. Based on the estimation of asymmetric information model to the respondent of rural banks and small businesses, the result shows that adverse selection can be avoided by strengthening the information about prospective borrowers. Regarding moral hazard, rural banks and small businessmen argued that the imposition of the collateral to the debtor has an important role to avoid moral hazard. Rural bank respondents stated that the KUR program with low-interest rates has affected their business development. The results implied the need of broadening the collaboration schemes between this people's business credit program and rural banks.

• The Journal of Asian Finance, Economics and Business
• /
• 제8권1호
• /
• pp.375-383
• /
• 2021

The justice issue in the service recovery process has become an interesting topic especially in rural banks in Indonesia. There are two types of justice issues in handling the complaint process; distributive and informational. This study aims to analyze the effect of distributive and informational justice on complaint handling satisfaction. This study also examines the mediating role of positive and negative emotions on the effect of justice in post-merger rural banks. This research employs a survey by distributing a questionnaire to 238 customers who have complained to one of the post-merger rural banks in West Java and Yogyakarta. This study uses the structural equation modelling (SEM) method by WarpPLS software. The results reveal that distributive and informational justice have a positive effect on positive and negative emotions, while informational justice does not affect positive and negative emotions. Distributive and informational justice directly affect satisfaction over complaint handling. On the other hand, positive and negative emotions affect satisfaction over complaint handling. The findings of this study suggest that positive emotion also mediates the distributive justice effect on satisfaction over complaint. Lastly, positive and negative emotions do not mediate the informational justice effect on satisfaction over complaint handling at post-merger rural banks in West Java and Yogyakarta, Indonesia.

• 국제지역연구
• /
• 제22권1호
• /
• pp.123-140
• /
• 2018

본고는 방글라데시 은행 대출의 군집행동을 실증분석하였다. 실증분석에는 2001년부터 2014년 2분기까지 국책은행, 국내민간은행, 외국계은행, 이슬람은행 등 방글라데시 상업은행의 총대출, 도시대출, 농촌대출 패널자료를 사용하였다. 국내민간은행과 외국계은행의 총대출 및 도시대출의 경우 2008년 글로벌금융위기 기간 동안에 대출 동조현상이 뚜렷이 나타났다. 이는 이들 은행유형이 국책은행보다 수익성을 중시하고 정부 및 중앙은행으로부터 엄격한 감독규제을 적용받으므로 불확실성이 커진 금융위기기간에 은행이 독자적으로 대출태도를 결정하기보다는 자신과 유사한 은행의 대출결정을 참조하면서 대출태도를 결정하였음을 보여준다. 반면, 이슬람은행의 경우 2002년부터 2003년에 이르는 기간에 대출 쏠림현상이 커졌으며, 2008년 금융위기기간에 특별한 쏠림현상을 보이지 않았다. 이는 기존문헌에서 지적하듯이 이슬람은행의 수익 및 영업 구조가 일반 은행과 다르기 때문으로 해석할 수 있다. 한편, 농촌대출의 경우 군집행동의 패턴이 총대출 및 도시대출과 상당히 달랐는데, 무엇보다도 군집행동이 지속되지 않고 단속적으로 발생하였다는 것이 큰 특징이다. 이러한 차이점은 농촌 대출의 특성에 기인한다. 즉, 농업종사자들의 대출상환능력은 과거 대출이력에 기반한 신용도보다는 해당 연도의 작황에 따라 결정되고, 대출 주기가 농사주기와 연동되어 대출기간이 짧다. 따라서 대출의 군집행동과 같은 일정 대출패턴이 중장기간 발생하지 않고 단속적으로 발생한다고 이해할 수 있다. 마지막으로, 대출 연관성이 은행유형간에 존재하는 지를 알아본 결과, 국책은행, 외국계은행, 이슬람은행의 대출 결정은 국내민간은행의 대출증감에 영향을 받는 것으로 나타났다. 이를 통해 국내민간은행 대출결정이 대출시장의 불확실성을 완화시키는 정보로서의 기능을 한다는 것을 알 수 있다.

• The Journal of Asian Finance, Economics and Business
• /
• 제8권1호
• /
• pp.647-654
• /
• 2021

This study examines the non-performing loans of rural banks and macroeconomic factors in Indonesia, including inflation, exchange rates, and interest rates. Theoretically, the existence of erratic macroeconomic conditions can affect the level of non-performing credit risk in rural credit banks in Indonesia. The effect of macroeconomic conditions on non-performing loans has a different response for each economic sector. The main objective of this study is to determine the effect of macroeconomic factors (inflation, exchange rates, and interest rates) and bank-specific factors (credit) on the Non-Performing Loans (NPL) of Rural Banks in Indonesia for the period from January 2015 to December 2018. This study uses a Vector Error Correction Model (VECM) estimation to determine the effect of independent variables consisting of macroeconomic factors and bank-specific factors. Based on the estimation results of the Vector Error Correction Model, three variables that have a positive and significant effect on long-term non-performing loans are credit, inflation, and interest rates. Meanwhile, in the short term, there are only two variables that have a positive and significant effect on non-performing loans, namely, credit and interest rates. Inflation and exchange rate variables have a negative and insignificant effect on bad credit in the short term.

• The Journal of Asian Finance, Economics and Business
• /
• 제8권3호
• /
• pp.517-525
• /
• 2021

The study investigates the behavior of Asian banks in response to the subprime mortgage crisis and examines how countries that have experimented with a mix of conventional and Islamic banking managed their balance sheet during that period. The study carries out an independent mean t-test comparing the difference of leverage of 464 conventional commercial Asian banks pre- and post-crisis from the largest twenty-five Asian economies based on GDP (2007). The analysis uses 10-year unbalanced panel data of conventional banks and employs the generalized least squares estimation using a dummy variable event window method to capture the response of Asian banks. The study finds evidence of a structural change in the capital structure of Asian commercial banks in response to the financial crisis. Findings suggest that conventional banks increased their capital position more in countries that have both Islamic and conventional banking than those countries without Islamic banking services. By having Islamic banking in their product portfolio, countries can exert market discipline on conventional banks. The study identifies a significant role of global macroeconomic shocks on banks liability structure decision-making. Evidence shows that this increase in capital positioning by banks was a permanent rather than a temporary response.

• The Journal of Asian Finance, Economics and Business
• /
• 제6권2호
• /
• pp.119-122
• /
• 2019

The study aims to investigate factors influencing business households' decision for borrowing credit: the case of commercial banks in Tra Vinh Province, VietNam. The study was conducted by collecting data from 300 business households traded at four commercial banks in Tra Vinh province (Viet Nam bank for agriculture and rural development, Tra Vinh Branch; Viet Nam jointstock commercial bank industry and trade, Tra Vinh Branch; Asia joinstock commercial bank, Tra Vinh Branch; Viet Nam jointstock commercial bank for foreign trade, Tra Vinh Branch). By the use of the Binary Logistic regression method, the research found out that the factors influencing to borrow c redit of household business's decision including: banks brand names, loan interest rates, service attitude, and loan procedures. Of those, the banks brand names and lending interest rates have the strongest impacts on borrow credit decision of business households at commerc ials banks in Tra Vinh province. Since then, the study has proposed solutions to improve access to credit of business households in commercial banks in Tra Vinh province in the coming time, such as: developing a bank brand; the development of flexible lending interest rate policies; improve service style of bank staff; at the same time, simplifying lending procedures.

• The Journal of Asian Finance, Economics and Business
• /
• 제7권9호
• /
• pp.371-376
• /
• 2020

The study seeks to explore the factors affecting the access to credits by individual customers at commercial banks in Tra Vinh province, Vietnam. Based on these results, the author proposes solutions to further improve the ability to serve individual customers at commercial banks in the province in the future. The study was conducted with a method of collecting primary data of 300 individual customers including 150 people with access to credits and 150 people without accessing to credits at six commercial banks in Tra Vinh Province, Viet Nam - Bank of Agriculture and Rural Development, Bank for Foreign Trade Commercial Bank, Bank for Investment and Development of Vietnam, Asia Commercial Bank in Tra Vinh, Sai Gon Commercial Joint Stock Bank, and Bank of East Asia. The author has used binary regression methods, and the study found that seven factors affecting the ability of individual customers to access capital, namely, career, qualifications, collaterals, incomes, documents, loan and business plans, and experience. In particular, occupation, experience, and documents are the most influential factors. From the above results, the author proposes policy implications to improve individual customers' access to credits at commercial banks in Tra Vinh province in the near future.