Bank Credit Distribution: Determinant Factors and Insights from Rural Credit Banks in East Java

Rani Vista Puspitaningrum

doi:10.61656/pmar.v6i1.267

Rani Vista Puspitaningrum University of Bedfordshire - UK

DOI: https://doi.org/10.61656/pmar.v6i1.267

Abstrak

Purpose: To evaluate East Java's economic growth, understanding the dynamics of bank credit distribution is crucial, particularly as financial institutions play a significant role in supporting economic activities. This study aimed to analyze and empirically verify the effects of the inflation rate, credit interest rate, and the growth of the number of micro, small, and medium enterprises (MSMEs) on the distribution of bank credit by rural credit banks in the region. The research seeks to uncover how these factors contribute to shaping credit distribution patterns, offering valuable insights for policymakers and financial stakeholders.

Method: This study employed a quantitative research design and utilized secondary data collected from rural credit banks in East Java over the past decade from 2012 to 2023 quarterly. Multiple linear regression analysis served as the primary analytical tool.

Findings: The results indicated that neither the inflation rate nor the credit interest rate significantly influenced the distribution of bank credit. However, the growth in the number of MSMEs demonstrated a positive and significant impact on credit distribution levels.

Implication: These findings suggest that policymakers should support the development of MSMEs, which could enhance credit distribution by rural credit banks, potentially driving economic growth in East Java. For future research, data panel analysis might be employed for secondary data on time series.

Originality: This study uniquely contributes by integrating macroeconomic factors and MSME development into a comprehensive analysis of credit distribution patterns within rural credit banks in East Java, focusing on a decade-long dataset.

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