Finances, accounting and audit

Maximizing efficiency and profit through productive asset management and risk control

Economic Annals-XXI

Economic Annals-XXI: Volume 204, Issue (7-8), Pages: 50-56

Citation information:
Prihatna, N., Nidar, S. R., Anwar, M., & Herwany, A. (2023). Maximizing efficiency and profit through productive asset management and risk control. Economic Annals-XXI, 204(7-8), 50-56. doi: https://doi.org/10.21003/ea.V204-07

EA-XXI-V204-07Download PDF

Nana Prihatna
MA (Economics),
Faculty of Economics,
Universitas Padjadjaran
Jatinagor, Jawa Barat, 40132, Indonesia
nanaprihatna24@gmail.com
ORCID ID: https://orcid.org/0009-0000-0876-2825

Sulaeman Rahman Nidar
PhD (Economics),
Faculty of Economics,
Universitas Padjadjaran
Jatinagor, Jawa Barat, 40132, Indonesia
sulaeman.rahman@unpad.ac.id
ORCID ID: https://orcid.org/0000-0002-9780-2012

Mokhamad Anwar
PhD (Economics), Professor,
Faculty of Economics,
Universitas Padjadjaran
Jatinagor, Jawa Barat, 40132, Indonesia
mokhamad.anwar@unpad.ac.id
ORCID ID: https://orcid.org/0000-0003-2641-7667

Aldrin Herwany
PhD (Economics),
Faculty of Economics,
Universitas Padjadjaran
Jatinagor, Jawa Barat, 40132, Indonesia
aldrin.herwany@fe.unpad.ac.id

Maximizing efficiency and profit through productive asset management and risk control

Abstract. This study aims to examine data and information related to the effect of productive asset management and risk control, both on operational efficiency (OER) and on the profitability of rural banks in West Java, Indonesia. This study was designed with the Ex Post Facto research method with descriptive-verification/associative objectives, namely providing descriptions and testing the relationship between variables (hypothetical testing) with the investigation type of causal relationship and correlation between variables. The unit of analysis is rural banks in West Java, with 26 cities/regencies, and one of the rural banks with the largest assets and complete financial data were chosen. This study observed its financial performance sourced from Bank Indonesia and the Financial Services Authority (2014), in the form of financial reports from each rural bank from 2010 to 2019, with consideration prior to the COVID-19 pandemic. The research findings resulted in a novelty, namely the Model of OER and Profitability (NPM and NIM) of rural banks which revealed that efforts to improve the performance of a healthy rural bank in West Java need to be supported by good management of productive assets and risk control.

Keywords: Bank; Rural Bank; Productive Asset Management; Risk Control; Operational Efficiency; OER; Profitability; Financial Performance; West Java; Indonesia

JEL Classifications: Е24; Е41; Е64; I18; J28; J31

Acknowledgements and Funding: The authors received no direct funding for this research.

Contribution: The authors contributed equally to this work.

Data Availability Statement: The dataset is available from the authors upon request.

DOI: https://doi.org/10.21003/ea.V204-07

References

  1. Anwar, M., Nidar, S. R., Komara, R., & Layyinaturrobaniyah, L. (2020). Rural bank efficiency and loans for micro and small businesses: evidence from West Java Indonesia. International Journal of Emerging Markets, 15(3), 587-610.
    https://doi.org/10.1108/IJOEM-11-2017-0494.
  2. Awojobi, O., & Roya, A. (2011). Analysing Risk Management in Banks: Evidence of Bank Efficiency and Macroeconomic Impact. Journal of Money, Investment and Banking Issue 22.
    https://ssrn.com/abstract=1947550
  3. Balcerzak, T., & Rajchel, J. (2022). Digital Cellular Technologies and Gnss with Uav in Sar Missions For Public Protection And Disaster Relief Services. Journal of Airline Operations and Aviation Management, 1(2), 15-25.
    https://doi.org/10.56801/jaoam.v1i2.1
  4. Bank Indonesia. (2011). Association of Banking Regulations. Jakarta: Bank Indonesia.
    https://www.bi.go.id/en/tentang-bi/profil/uu-bi/default.aspx
  5. Anwar, M., & Herwany, A. (2006). The determinants of successful bank profitability in Indonesia: empirical study for provincial government’s banks and private non-foreign banks. Working Papers in Business, Management and Finance, 200601. Department of Management and Business, Padjadjaran University.
    https://ideas.repec.org/p/unp/wpaman/200601.html
  6. Jamalpour, H., & Derabi, J. Y. (2023). Aesthetic Experience, Neurology and Cultural Memory. Passagens: Revista Internacional de História Política e Cultura Jurídica, 15(2), 340-348.
    https://doi.org/10.15175/1984-2503-202315208
  7. Kithinji, A. M., (2010). Credit Management and Profitability of Commercial Bank in Kenya. Working Paper. School of Business, University of Nairobi-Kenya.
    http://erepository.uonbi.ac.ke/bitstream/handle/11295/40437/aibuma2011-submission232.pdf
  8. Konishi, M., & Yashuda, Y. (2004). Factors Affecting Bank Risk Taking: Evidence from Japan. Journal of Banking Finance, 28(1), 215-232.
  9. Levine, M., Stephan, F., Timmothy C., & Nerenson Mark, L. (2008). Statistics for Managers: Using Microsoft Excel. New Jersey:  Prentice Hal.
  10. Ross, A., Westerfield, W., & Jaffe, J. (2005). Corporate Finance (7th edition). New York: McGraw-Hill.
  11. Shamsiev, Z. Z. (2022). Improving The Process Of Training Air Traffic Controllers Based On The Formation Of An Electronic Educational Environment. Journal of Airline Operations and Aviation Management, 1(2), 1-6.
    https://doi.org/10.56801/jaoam.v1i2.5
  12. Subačienė, R., & Villis, L. (2010). A system of analysis of the total liabilities to total assets ratio. Ekonomika, 89(2), 120-129.
    https://www.researchgate.net/publication/330518883_a_system_of_analysis_of_the_total_
    liabilities_to_total_assets_ratio#:~:text=the%20total%20liabilities%20to%20total%20assets%
    20ratio%20is%20the%20portion,%2c%202014).%20…
  13. Tightiz, L., & Yoo, J. (2022). A Review on a Data-Driven Microgrid Management System Integrating an Active Distribution Network: Challenges, Issues, and New Trends. Energies, 22(15), 8739.
    https://doi.org/10.3390/en15228739
  14. Yang, Z. (2009). Bank Branch Operating Efficiency: A DEA Approach. Proceedings of the International Multi Conference of Engineers and Computer Scientists, Vol. II, March 18-20, Hong Kong: IMECS.
    https://www.researchgate.net/publication/44259897_Bank_Branch_Operating_Efficiency_A_DEA_Approach
  15. Young, S., & O’Byrne, F. (2001). EVA and Value-Based Management: A Practical Guide to Implementation. Washington, D. C.: McGraw-Hill.

Received 20.02.2023
Received in revised form 12.04.2023
Accepted 16.04.2023
Available online 27.08.2023

EA-XXI-V204-07Download PDF
In, , , , , , , , , ,

More Papers

Internal auditor independence and audit quality: the influence of mediation role of professional ethics investigation (on the example of Gorontalo city inspectorate in Indonesia)

Usman, Fitrijanti, T., Soemantri, R., & Koeswayo, P. S. (2023). Internal auditor independence and audit quality: the influence of mediation role of professional ethics investigation (on the example of Gorontalo city inspectorate in Indonesia). Economic Annals-XXI, 206(11-12), 24-29. doi: https://doi.org/10.21003/ea.V206-04

Economic Annals-XXI