Abstract

This study aims to analyze the efficiency performance of conventional and Islamic rural banks in Indonesia, specifically, Bank Perkreditan Rakyat (BPR) and Bank Pembiayaan Rakyat Syariah (BPRS). Using a DEA approach, the results indicate that both BPR and BPRS are still inefficient in terms of the intermediation role but are efficient in production. Furthermore, the Tobit estimation show that these two efficiency results are positively affected by location and the capital adequacy ratio (CAR). These rural banks operating in cities tend to have a higher level of efficiency than otherwise. Moreover, the higher the capital, the more efficient both Islamic and conventional rural banks in terms of production and intermediation.

Original languageEnglish
Article numbere04390
JournalHeliyon
Volume6
Issue number7
DOIs
Publication statusPublished - Jul 2020

Keywords

  • Banking
  • Conventional and Islamic rural bank
  • Corporate finance
  • Data envelopment analysis
  • Econometrics
  • Efficiency
  • Financial economics
  • Microeconomics
  • Tobit

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