Rural banks and their lending distribution towards MSMEs during COVID-19 pandemic

This study examines the impact of credit risk in influencing lending by Rural Banks (BPRs) to micro, small and medium enterprises (MSMEs) during the pandemic. As micro-lenders, BPRs are expected to support MSMEs especially during the economic retardation. Inherited with opacity such as lack of credi...

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Bibliographic Details
Main Authors: Jourdano, Gerald Vidisa, Ottemoesoe, R. Shanti D.
Format: Conference Proceeding
Language:English
Subjects:
Banks
Small business
Statistical analysis
Online Access:Get full text
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Summary:This study examines the impact of credit risk in influencing lending by Rural Banks (BPRs) to micro, small and medium enterprises (MSMEs) during the pandemic. As micro-lenders, BPRs are expected to support MSMEs especially during the economic retardation. Inherited with opacity such as lack of credit history and financial statement transparency, the probability of credit default may increase during the pandemic, hence BPRs might be difficult to either implement their mandate through lending distribution or to face a higher number of NPL. The research is conducted by distributing questionnaires to 204 MSMEs borrowers who ask for loans from rural banks in 2020. Using logistic regression, this study finds that the chances of micro-enterprises to obtain credit are significantly higher than medium-sized firms and firms with shorter credit outstanding are more likely to obtain loan facilities.
ISSN:0094-243X
1551-7616
DOI:10.1063/5.0182171