Rural Banks Stability: Evidence From Bali

Abstract

Many researchers are interested in studying banking stability, but few specifically study the stability of rural banks. This study aims to understand the stability of rural bank in Bali. The latent variable of rural banks stability was measured in two ways, namely firm-level stability and systemic stability measures. The method used to measure firm-level stability was z-score. Systemic stability was measured by calculating the firm-level stability measures in aggregate for all rural banks in Bali. The results show that the stability of rural banks in all areas of Bali was in a stable condition. Overall, the stability of rural banks in the province of Bali was at 99.4913%. This means that the probability of rural bank’s instability in Bali was very low at 0.5087 % in the period of study.