The magnitude of potential micro-banking market makes many banks and other financial institutions to make profits in the segment of small and micro banking as a market for rural banks (BPR), especially Sharia rural banks (BPRS). Thus, the efficient BPRS is required to survive amid the competition. This study used parametric stochastic frontier approach (SFA) with the asset approach to analyze the efficiency levels of 59 BPRS in the period of 2nd Quarter June 2011 – 4th Quarter December 2012. The level of Bank efficiency could be integrated with the performance of banks which is adopted from Central Bank (BI) criteria, namely CAMEL (Capital, Asset Quality, Management, Earnings and liquidity). The results of this study indicated that there are significant differences between the efficiency level measured by SFA and the performance of CAMEL measured by ratio, which means that existing of CAMEL method do not show the level of efficiency of BPRS concerned. In addition, this study also showed that the BPRS is less efficient than Sharia Banks (BUS).
Copyright: © 2018 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
