Determining the Most Important Indicators Affecting the Failure Risk of Conventional and Sharia Rural Banks
Lina Nugraha Rani (a*), Eko Fajar Cahyono (b), M Fariz Fadillah Mardianto (c), Tika Widiastuti (d), Siti Zulaikha (e), Dwi Wulan Ramadani (f)

a,b, d, e, f : Sharia Economic Department, Faculty on Economics and Business, Universitas Airlangga,

a* : Corresponding author

c : Mathematics Department, Faculty of Science and technology, Universitas Airlangga,

Abstract

Abstract Purpose - This study aims to identify the variables that are considered the most important and prioritise the occurrence of BPR and BPR Syariah failure risks in Indonesia, provide solutions and strategies to prevent bank failure.

Design/methodology/approach -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 Rural Banks and Islamic Rural Banks (Rural Banks and Islamic 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

Findings - 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. Furthermore, the results of the study indicate which indicator components are considered the most important for the risk of failure of convetional and Sharia Rural Banks. The indicator component of the welfare aspect on macroeconomic variables is the most important. The component of the Liquidity indicator in the microprudential variable is the most important. In addition, the Bank^s Internal Resilience indicator on macroprudential variables becomes very important. The results of the study that show which aspects most influence the risk of failure make priority strategies in improving banking performance and sectors that support the performance of the banking industry so that 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. (BPR and BPRS)
Practical implications - The implication of this research is that regulators and the government must pay attention to several important factors causing the failure of BPR and BPR Syariah because the indicator component of the Welfare Aspect becomes very important for macroeconomic variables.

Originality/value - Macroeconomics, Macroprudential, Microprudential, and Internal Banks are obtained from the aspects that influence the occurrence of bank failures. Furthermore, to identify which aspects have the most potential to have a major role in a bank failure, these aspects need to be considered by practitioners in banking, academics, and other supporting elements to provide better policies in optimising the performance of the banking industry, especially BPR and BPRS. avoid potential failure.

Keywords: Analytical network process, Rural Bank, Sharia Rural Bank, Failure, Macroeconomics, Macroprudential, Microprudential, Bank Internal Factors

Topic: Islamic finance and banking