The Forming Factors of Rural Bank Performance

Abstract

Rural Bank Performance in Jabodetabek[1] fluctuated and tended to decrease. Bank performance can be influenced by many factors. Good Corporate Governance (GCG) is a hot topic whether it is a mandatory or a voluntary. On the other hand, a product development is an activity which has been done from time to time by bank. Based on these reasons, this research analyzes forming factors of rural bank performance from perspective of product development and GCG. By using moderated regression analysis, from 150 rural banks, it can be concluded that product development is a key factor of bank performance. However, GCG, which is still not a mandatory, is perceived as a bad thing to push bank performance recently, although it is needed in the long term period. This research suggests that bank should develop their products through augmented, service, actual, and core product development. In addition, implementing GCG is an investment. It is not just an expense. Bank should also realize that GCG sooner or letter GCG will be as a mandatory for doing a business.