Social Performance of Rural Bank: Impact of Commercialization Factors

Hesi Eka Puteri

Abstract

This study examined the impact of commercialization factors covering profitability, regulation, and competition on the social performance of rural bank. This research was quantitative that based on a survey on fifty units of rural banks in West Sumatera province of Indonesia from 2016 to 2018. The secondary data collected from the publication of financial services authority and other financial documents at rural banks then analyzed with panel data regression. The findings of this research showed that profitability and competition influenced the social performance, meanwhile regulation could not predict the achievement of social performance.  This finding reinforced the previous studies which identified the impact of some commercialization indicators towards the achievement of social performance but there was no regulation’s impact on social performance.  The impact of regulation which was originally expected to be able to strengthen the social responsibility mission of rural banks evidently did not stimulate the increase of social performance.

Keywords

Commercialization, Social Performance, Rural Banks.

Full Text:

PDF

References

Abdulai, A., & Tewari, D. D. (2017). Trade-off between Outreach and Sustainability of Microfinance Institutions: Evidence from Sub-Saharan Africa. Enterprise Development and Microfinance, 28(3), 162-181.

Adams, A., & Tewarib, D. D. (2017). Determinants of Microfinance Outreach in Sub-Saharan Africa: a Panel Approach. Acta Commercii, 17(1), 1-10.

Amelec, V., & Carmen, V. (2015). Relationship between Variables of Performance Social and Financial of Microfinance Institutions. Advanced Science Letters, 21(6), 1931-1934.

Arsyad, L. (2008). Microfinance Institutions, Institutional Performance and Sustainability. Yogyakarta: Andi Offset.

Assefa, E., Hermes, N., & Meesters, A. (2013). Competition and the Performance of Microfinance Institutions. Applied Financial Economics, 23(9), 767-782.

Axmann, N. (2015). What is the Effect of Regulatory Supervision on the Profitability and Outreach of Microfinance Institutions? Southeast Asian Journal of Economics, 3(1), 1-25.

Bassem, B. E. N. S. (2012). Social and Financial Performance of Microfinance Institutions: Is There a Trade-Off? Journal of Economics and International Finance, 4(4), 92-100.

Bateman, M. (2014). The Rise and Fall of Muhammad Yunus and the Microcredit Model. In Management: Leading & Collaborating in Competitive World, 11Th. Edition. McGraw-Hill Education.

Bogan, V. L. (2012). Capital Structure and Sustainability: an Empirical Study of Microfinance Institutions. Review of Economics and Statistics, 94(4), 1045-1058.

Bresnahan, T. F., & Reiss, P. C. (1991). Entry and Competition in Concentrated Markets. Journal of Political Economy, 99(5), 977-1009.

Caserta, M., Monteleone, S., & Reito, F. (2018). The Trade-off between Profitability and Outreach in Microfinance. Economic Modelling, 72, 31-41.

Casini, P. (2008). Competition and Altruism in Microcredit Markets. Mimeo, ECARES, Universite Libre de Bruxelles Brussels.

Christen, R. P., Drake, D., & Rhyne, E. (2002). The Commercialization of Microfinance: Balancing Business and Development. In Bloomfield: Kumarian Press.

Cull, R., Demirgüç-Kunt, A., & Morduch, J. (2011). Microfinance Trade-Offs: Regulation, Competition and Financing. in The Handbook of microfinance (pp. 141-157).

Cull, R., Demirgüç-Kunt, A., & Morduch, J. (2011). Does Regulatory Supervision Curtail Microfinance Profitability and Outreach? World Development, 39(6), 949-965.

De Cloet, A., & Moyaert, H. (2014). Microfinance: Influence of Competition on Outreach. Published Thesis.

Gakhar, K., & Meetu. (2013). Financial Performance and Outreach of Microfinance Institutions: is There a Trade-Off? - an Empirical Study of Indian. Sona Global Management Review, 7(4), 1-10.

Gashayie, A. (2015). Factors that Affect Financial Sustainability of Microfinance Institution: Literature Review. European Journal of Business and Management, 7(7), 223-229.

Gwasi, N., & Ngambi, M. T. (2014). Competition and Performance of Microfinance Institutions in Cameroon. International Journal of Research in Social Sciences, 3(8), 1-36.

Hashemi, S., & Anand, M. (2007). Toward a Social Performance Bottom Line in Microfinance. CGAP: Washington DC.

Hermes, N., & Lensink, R. (2011). Microfinance: its Impact, Outreach, and Sustainability. World Development, 39(6), 875-881.

Huq, B. I. A., Azad, M. A. K., Masum, A. K. M., Wanke, P., & Rahman, M. A. (2017). Examining the Trade-Off between Social Outreach and Financial Efficiency: Evidence from Microfinance Institutions in South Asia. Global Business Review, 18(1), 617-828.

Johnson, C. (2015). The Impacts of Capital Structure on Depth of Outreach in Sub-Saharan Africa. Critique: a Worldwide Journal of Student Politics, 118-149.

Kaur, P. (2014). Outreach and Sustainability of Microfinance Institutions in India in Pre and Post Andhra Pradesh Microfinance Crisis in Context of South Asia. Global Journal of Finance and Management, 6(6), 569-574.

Kipesha, E. F., & Zhang, X. (2013). Sustainability, Profitability, and Outreach Tradeoffs: Evidence from Microfinance Institutions in East Africa. European Journal of Business and Management, 5(8), 136-149.

Lafourcade, A., Isern, J., Mwangi, P., & Brown, M. (2005). Overview of the Outreach and Financial Performance of Microfinance Institutions in Africa. Microfinance Information Exchange; Washington; DC. Available at: Http://www. Mixmarket. Org/Medialibrary/Mixmar.

Lebovics, M., Hermes, N., & Hudon, M. (2016). Are Financial and Social Efficiency Mutually Exclusive? a Case Study of Vietnamese Microfinance Institutions. Annals of Public and Cooperative Economics, 87(1), 55-77.

Mersland, R., & Strøm, R. Ø. (2014). Microfinance Financial and Social Performance: an Introduction in Microfinance Institutions. In Microfinance Institutions (pp. 1-11). Palgrave Macmillah: London.

Millson, H. F. (2013). The Trade-Off Between Sustainability and Outreach: the Experience of Commercial Microfinance Institutions Department of Economics Advisor: Shannon Mudd. Doctoral Dissertation.

Olsen, T. D. (2010). New Actors in Microfinance Lending: the Role of Regulation and Competition in Latin America. Perspectives on Global Development and Technology, 9(500), 519.

Piot-lepetit, I., & Nzongang, J. (2014). Financial Sustainability and Poverty Outreach Within a Network of Village Banks in Cameroon: a Multi-DEA Approach. European Journal of Operational Research, 234(1), 319-330.

Qinlan, Z., & Izumida, Y. (2013). Determinants of Repayment Performance of Group Lending in China. China Agricultural Economic Review, 5(3), 328-341.

Quayes, S. (2015). Outreach and Performance of Microfinance Institutions: a Panel Analysis. Applied Economics, 47(18), 1909-1925.

Rao, K. R. M., & Fitamo, T. L. (2014). Concepts and Measures of Outreach and Sustainability in Microfinance Institutions: a Comprehensive Literature Review. Research Journal of Finance and Accounting, 5(21), 41-49.

Rhyne, E. (1998). The Yin and Yang of Microfinance: Reaching the Poor and Sustainability. Microbanking Bulletin. Issue, 2(1), 6-8.

Schreiner, M. (2002). Aspects of Outreach: a Framework for Discussion of the Social Benefits of Microfinance. Journal of International Development, 14(5), 591-603.

Yaron, J., & Benjamin. (1997). Rural Finance: Issues, Design, and Best Practices (Vol. 14). World Bank: Washington DC.

Zerai, B., & Rani, L. (2012). Is There a Trade-Off Between Outreach and Sustainability of Microfinance Institutions? Evidence from Indian Microfinance Institutions (MFIs). European Journal of Business and Management, 4(2), 90-99.


View Counter: Abstract - 183 and PDF - 124

Refbacks

  • There are currently no refbacks.