THE DISRUPTION OF FINTECH ON RURAL BANK: AN EMPIRICAL STUDY ON RURAL BANKS IN INDONESIA

Abstract

This research aims to investigate if the emergence of financial technology startups gives disruption to rural banks. The research is to determine the difference before and after the emergence of Fintech on Non-Performing Loans (NPL), Return on Assets (ROA), Loan to Deposit Ratio (LDR), and Net Loan to Total Asset Ratio (NLTA). Because nowadays the conditions of the Rural Bank industry face challenges with the emergence of Fintech. This research is conducted in Indonesia by involving rural banks registered in Financial Service Authority in the period of 2013 - 2018. This research data is taken from 50 Rural Banks. The method carried out in this research was 3 years before the emergence of Fintech and 3 years after the emergence of Fintech. This study employed Paired Sample T-test and Wilcoxon Test to examine if NPL, ROA, LDR, and NLTA received differences before and after financial technology emerged. The test results show that there is a negative difference before and after the emergence of Fintech on NPL and ROA. Meanwhile, the test results also show that there is no negative difference before and after the emergence of Fintech on LDR and NLTA.