Published March 31, 2020 | Version v1
Journal article Open

The Effect of Internal and External Environment of Banks Local Peoples Rights on the Effectiveness and Performance of Rural Bank in the East Java Economic Growth


This study aims to determine the influence of the internal and external environment of rural banks owned by local governments and their impact on the welfare of the people in East Java. The population is the village community of 5 Rural Credit Banks owned by the regional government that channeled village fund allocations in East Java. Using the SEM rule, the number of samples is 250 respondents. The results showed that: 1). The internal environment influences the effectiveness, performance of rural banks, and 3). The internal environment has a negative effect on rural economic growth. 2). The external environment affects the effectiveness, performance of rural banks, and rural economic growth. 7). The effectiveness of rural banks affects the performance of rural banks. 3). The effectiveness of rural banks affects the welfare of rural communities, community economic growth, and community welfare. 4). Village economic growth affects the welfare of the community. 5). The welfare of village communities after the government channeled village funds through rural banks in East Java increased, this is evidenced by the improved living conditions of the community, where villagers now have savings, and each villager has a semi-permanent residence. Suggestions to rural banks, to always improve their performance by increasing the number of village funds distributed annually; Increase the number of villages that are rural bank partners; and improving the ability of rural banks to collect village funds from the government. Further research is recommended to increase the scope of research, taking into account all districts in East Java.


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