Foreign Bank Entry and Credit Allocation to SMEs: Evidence from ASEAN Countries

Viverita, Viverita; Lubis, Arief Wibisono; Bustaman, Yosman; Riyanti, Ririen S.

doi:10.1016/j.sbspro.2015.11.140

Cited by 11 publications

(8 citation statements)

References 21 publications

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“…If it is compared to the descriptive data, it shows that the average NPL of rural banks in West Java is much higher than the 5 percent limit; Therefore, it has been a crucial task for rural banks’ management in West Java to recover and settle the bad loans, in order to enhance their capacity to provide lending to MSBs in the future. The finding of a negative association between banks’ NPL and the banks’ loan provision for MSBs has coincided with Peek and Rosengren (1998) but does not support Viverita et al (2015).…”

Section: The Relationship Between Bank Efficiency and Msbs Loans Of Rural Banks In West Java Indonesiamentioning

confidence: 82%

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Rural bank efficiency and loans for micro and small businesses: evidence from West Java Indonesia

Anwar

Nidar

Komara

et al. 2019

IJOEM

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Purpose The purpose of this paper is to examine the relationship between rural banks’ efficiency and their lending provision for micro and small businesses (MSBs) in West Java Indonesia. Rural banks are special banks that are generally located in the district and sub-district areas and they are very involved in providing loans to MSBs. Design/methodology/approach The study includes 212 rural banks in various districts in West Java province over the 2012–2016 period. Data envelopment analysis is employed to obtain banks’ technical efficiency and panel data analysis is used to reveal the impact of rural banks’ efficiency on their loan provision to MSBs. Findings The findings reveal that technical efficiency of the rural banks has a significant positive impact on their loan provision to MSBs in West Java Indonesia. These results have underscored the importance of rural banks in maintaining and increasing their bank efficiency levels to enhance their capacity in providing loans to MSBs. Practical implications The results of this study have brought some implications for practitioners (rural bank management) to maintain and improve their efficiency in order to expand their capacity to lend to MSBs. The roles of Otoritas Jasa Keuangan or the Indonesia Financial Services Authority in monitoring the efficiency of rural banks and overseeing the provision of their loans to MSBs are also very necessary in ensuring good performance of rural banks in terms of both aspects, respectively. Social implications This study highlights the importance of rural banks in providing loans to MSB segments. The contribution of rural banks in stimulating the development of MSBs is believed to be able to produce positive social implications in terms of empowering the economic and social life of MSBs in their local communities. Originality/value The study fills the literature gap by revealing a significant relationship between bank efficiency and loan provision for MSBs in the context of rural banks.

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Section: The Relationship Between Bank Efficiency and Msbs Loans Of Rural Banks In West Java Indonesiamentioning

confidence: 82%

“…In the case of Indonesia and other countries in ASEAN, Viverita et al (2015) examine the relationship between foreign ownership and bank loan allocation for SMEs. The findings show that without specific policy regulations to meet the needs of SMEs, foreign banks will always tend only to benefit large companies.…”

Section: Literature Reviewmentioning

confidence: 99%

Rural bank efficiency and loans for micro and small businesses: evidence from West Java Indonesia

Anwar

Nidar

Komara

et al. 2019

IJOEM

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“…Similar research was conducted by [9] on a sample of banks in Asia. They aimed to identify the impacts of foreign banks on MSME credit distribution.…”

Section: S0mentioning

confidence: 65%

“…Looking for evidence at such behavior in Indonesia, it was actually the national bank that distributed largest MSME credit. Viverita et al [9] used panel data for the regression model with the bank performance indicator such as NPL and CAR, as its variables.…”

Section: S0mentioning

confidence: 99%

The Analysis of Target Achievement in Bank Indonesia 2015 Regulation on Lending for Micro, Small and Medium Enterprises

Lisa¹,

Martokoesoemo²

2018

Proceedings of the 2nd International Conference on Indonesian Economy and Development (ICIED 2017)

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Micro, Small and Medium Enterprises (MSME) are important sectors in the economy, especially for developing countries. One of the biggest obstacles towards developing the sector is related to financing. Bank Indonesia has launched the regulation called Bank Indonesia's Policy/Peraturan Bank Indonesia (PBI) 2015 stating that all commercial banks must allocate 20% of the total credit for MSMEs loan. Panel regression models are used to show that Non Performing Loan (NPL) and Third Party Fund (TPF) affect the credit supply for MSMEs. Moreover, the results show that Foreign Bank and Joint-Venture Bank are still far from the target.

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“…The weak performance of SMEs due to lack of access to finance, technology, skills and product quality. In addition, Viverita et al (2015) found that greenfield banks tend to lend a smaller proportion to SMEs than take-over banks. They prefer to lend to "creditworthy" customers like larger corporations.…”

Section: Introductionmentioning

confidence: 99%

Financing needs of micro-enterprises along their evolution

Prijadi¹,

Wulandari²,

Desiana³

et al. 2020

IJOES

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Purpose The purpose of this paper aims to investigate micro enterprises financing in Indonesia and examines how this financing differs, depending on the enterprise’s development stage. This research also identifies some structural problems related to micro-financing and provides workable solutions. Design/methodology/approach This research uses the entrepreneurial network model of Schutjens and Stam (2003) to examine how Indonesian micro and small enterprises (MSEs) evolve even before they become regular small businesses. Content analysis is used on 10 micro-enterprises from Jakarta, the capital city of Indonesia and its surroundings. Financing issues at each stage of enterprise development are identified and deeply examined. Findings This research not only confirms the significant financing problems micro-enterprises face but also clarifies that these problems are unique to each stage of the MSEs’ development. One insight is that most micro-enterprises do not use funding from formal institutions. That is, business owners rely more on funding from non-formal institutions. This is because these enterprises’ managers generally cannot prepare loans application and/or they are lack of knowledge/training on financing matters. They hesitate to borrow from formal financial institutions, as the rates are high but the processing time is longer than those of the loan sharks. Originality/value This research contributes to the field of entrepreneurial finance by identifying the structural problems inherent in micro-finance and providing workable solutions for overcoming these problems.

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Foreign Bank Entry and Credit Allocation to SMEs: Evidence from ASEAN Countries

Cited by 11 publications

References 21 publications

Rural bank efficiency and loans for micro and small businesses: evidence from West Java Indonesia

Rural bank efficiency and loans for micro and small businesses: evidence from West Java Indonesia

The Analysis of Target Achievement in Bank Indonesia 2015 Regulation on Lending for Micro, Small and Medium Enterprises

Financing needs of micro-enterprises along their evolution

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