DETERMINING THE MOST IMPORTANT INDICATORS AFFECTING THE FAILURE RISK OF CONVENTIONAL AND SHARIA RURAL BANKS 1) Lina Nugraha Rani, 2) Eko Fajar Cahyono, 3) M Fariz Fadillah Mardianto, 4) Dwi Wulan Ramadani
1,2,4 ) : Islamic Economic Department, Faculty of Economics and Business, Airlangga University,
3) : Mathematics Department, Faculty Technology and Science, Airlangga University
Abstract
Purpose: This study aims to identify the variables that are considered the most important and prioritize the occurrence of Conventional and Sharia Rural Banks failure risks in Indonesia, providing solutions and strategies to prevent bank failure.
Methods: This research uses the Analytical Network Process (ANP) method. Eleven (11) respondents represented banking practitioners at Conventional Commercial Banks and Islamic Commercial Banks, banking practitioners at Conventional and Sharia Rural Banks as well as academics with expertise in banking. The data obtained from the respondents were processed using the Super Decision software program and Excel
Results: The results showed that the aspects/variables that were considered very priority and most important according to the top ranking were 1) macroeconomic variables, 2) microprudential variables, 3) macroprudential variables, and 4) bank internal variables. Moreover, the welfare is the most infuence aspect in macroeconomics variable, while in the microprudential variable, it is liquidity indicator. In addition, the Bank^s Internal Resilience indicator on macroprudential variables becomes very important
Conclusion and suggestion : Overall, in this study, macroeconomic variables with sub-indicators of welfare aspects become a priority in improving the banking system to reduce the risk of bank failure.Furthermore, the government can mitigate those risks by taking some ways, such as maintaining good economic growth and reducing growth rates, improving the quality of Rural Bank and Sharia Rural Bank human resources by providing massive and continuous scholarships and training.
Keywords: Analytical network process, Bank Internal Factors, Macroeconomics, Macroprudential, Microprudential.
Topic: Islamic accounting, auditing, and performance changes
