Is There Moral Hazard in Islamic Rural Bank Financing?

Adelia Oktarina, Idqan Fahmi, Irfan Syauqi Beik

Abstract


The credit market was identical to asymmetric information in it, both conventional and sharia credit markets. One of the forms of this asymmetric information was moral hazard. This study aimed to identify the existence of moral hazard in credit market (financing) by comparing the customer conditions in islamic rural bank and conventional rural bank. This study also intended to identify the factors influencing the moral hazard. The analysis used was logistic regression method. The result showed that islamic rural bank had a bigger potential to experience moral hazard compared to the conventional customers. Generally, the factors which influence the moral hazard such as age, business conditions, amount of financing, length of financing, and type of bank.

Keywords


Islamic rural bank, factors, logistic regression, moral hazard, solutions

Full Text:

PDF

References


Akerlof, G.A. (1970). The market for “lemons”: quality uncertainty and the market mechanism. The Quarterly Journal of Economics 84(3): 488-500

Anggarwal, R., Yousef, T. (2009). Islamic banks and investment financing. Journal of Money, Credit and Banking, 32(1):93-120.

Antonio (2001). Bank Syariah dari Teori ke Praktik. Jakarta (ID): Gema Insani.

Armanto, B. Fenomena credit crunch dalam pasar kredit dan implikasinya terhadap intermediasi perbankan Indonesia: analisis empiris perbankan Indonesia sebelum dan setelah periode krisis .[disertasi]. Depok : Universitas Indonesia

Avery, R.B., Berger, A.N. (1991). Loan commitments and bank risk exposure.Journal of Banking and Finance 15 : 173-192

Bakhtiar, T., Sugema, I. (2012). Masalah informasi asimetrik dalam sistem perbankan syariah: adverse selection problem.eprints.unisbank.ac.id

Besanko, D., Kanatas, G . (1993). Credit market equilibrium with bank monitoring and moral hazard. The Review off Financial Studies 6(1): 213-232

[BI] Bank Indonesia. (2007). Peraturan Bank Indonesia Nomor: 9/17/PBI/2007 tentang Sistem Penilaian Tingkat Kesehatan Bank Perkreditan Rakyat Berdasarkan Prinsip Syariah.[Internet]. [diunduh: 2017 Maret 8]. Tersedia pada: http://www.bi.go.id

Buttner, E.H., Rosen, B. (1988). Bank loan officers’ perceptions of the characteristics of men, women, and successful entrepreneurs. Journal of Business Venturing 3(3):249-258. doi : 0883-9026(88)90018-3

Carter, S., Shaw, E., Lam, W., Wilson, F. (2007). Gender, enterpreneurship, and bank lending : the criteria and processes used by bank loan officers in assessing applications. Entrepreneurship Theory and Practice 31(3): 427-444. doi : j.1540-6520.2007.00181.x

Chan, Y.S., Thakor, A.V. (1987). Collateral and competitive equilibria with moral hazard and private information. The Journal of Finance 42(2):345-363

Chiappori, P.A., Salanie, B. (2000). Testing for asymmetric information in insurance markets. Journal of Political Economy. 108(1):56-78.

Cressy, R., Toivanen, O. (2001). Is there adverse selection in the credit market?. Venture Capital: International Journal of Entrepreneurial Finance. 3(3):215-238.

DeVaney, S.A., Lytton, R.H. (1995). Household insolvency: a review of household debt repayment, delinquency, and bankruptcy. Financial Services Review. 42(2):137-156.

Edelberg, W. (2004). Testing for adverse selection and moral hazard in consumer loan markets. FEDS Working Paper No. 2004-09.

Firdaus, M., Harmini, Farid, M.A. (2011). Aplikasi Kuantitatif Untuk Manajemen dan Bisnis. Bogor (ID): IPB Press.

Ghatak, M., Guinnane, T. (1999). The economics of lending with joint liability: theory and practice. Journal of Development Economics. 60(1):195-228.

Hermes N, Lensink R, Mehrteab HT. 2005. Peer monitoring, social ties and moral hazard in group lending programs: evidence frim Eritrea. World Development 33(1):149-169. doi: 10.1016/j.worlddev.2004.09.001

Hillier, B., Ibrahimo, M.V. (1993). Asymmetric information and model of credit rationing. Bulletin of Economic Research.45(4):277-304.

Holmstrom, B. (1979). Moral hazard and observability. The Bell Journal of Economics,10(1):74-91.

Huda, A.N. 2012. The development of Islamic financing scheme for SMEs in a developing country: the Indonesian case. Procedia: Social and Behavioral Science 52:179-186

Igawa, K., Kanatas, G. (1990). Asymmetric information, collateral, and moral hazard. The Journal of Financial and Quantitative Analysis. 25(4):69-490.

Juanda, B. (2009). Ekonometrika: Pemodelan dan Pendugaan. Bogor (ID): IPB Press

Kasmir (2014). Bank dan Lembaga Keuangan Lainnya. Jakarta : RajaGrafindo

Leland, H.E., Pyle, D.H. (1976). Informational asymmetries, financial structure, and financial intermediation. The Journal of Finance 32(2): 371-387

Li, S., Yang, Y., Zongfang, Z. (2014). Research on impact of moral hazard on individual credit risk. Procedia Computer Science 31(1): 577-586

McCaskie, P. (1999). Asymmetric information , adverse selection and moral hazard in the banking industry. Working Paper 1999(04).

Nuryakin, C., Warjiyo, P. (2006). Perilaku penawaran kredit bank di Indonesia: kasus pasar oligopoli periode Januari 2001-Juli 2005. Buletin Ekonoomi Moneter dan Perbankan

Paloma, C. (2013). Advese selection dan moral hazard pada skim kredit lembaga keuangan mikro agribisnis (LKM-A) PUAP di Kota Padang. [tesis]. Bogor (ID): IPB

Pauly, M.V. (1968). The economics of moral hazard: comment. The American Economic Review 58(3):531-537

Peterson, R.L. (1981). An investigation of sex discrimination in commercial banks’ direct consumer lending. The Bell Journal of Economics 12(2): 547-561. doi : 10.2307/3003571

Repullo, R., Suarez, J. (1999). Entrepreneurial moral hazard and banking monitoring: a model of credit channel. European Economic Review 44(10): 1931-1950. doi:10.1016/S0014-2921(99)00069-0

Simtowe, F., Zeller, M., Phiri, A. (2006). Determinants of moral hazard in microfinance: empirical evidence from joint liability lending programs in Malawi. African Review of Money Finance and Banking :5-38.

Stiglitz, J.E., Weiss, A. (1981). Credit rationing in markets with imperfect information, part II: constraints as incentive devices. The American Economic Review. 71(3):393-410.

Sumarwan, U. (1993). Socioeconomic and psycological variables influencing household debt. [disertasi]. Ames:Iowa

Taswan (2011). Konsekuensi informasi asimetrik dalam perkreditan dan penanganannya pada lembaga perbankan. Fokus Ekonomi. 10(3):226-234.

Trad, N., Trabelsi, M.A., Goux, J.F. (2016). Risk and profitability of Islamic banks: a religious deception or an alternative solution.

European Research on Management and Business Economics

Varian, H.R. (2010). Intermediate Microeconomics: A Modern Approach . New York (US): W.W. Norton & Company

Wolfe, J.R, Goddeeris, J.H (1991). Adverse selection, moral hazard, andd wealth effects in the medigap insurance market. Journal of Health Economics. 10(4):433-459




DOI: http://dx.doi.org/10.21043/iqtishadia.v12i2.3875

Copyright (c) 2019 IQTISHADIA

Iqtishadia Journal Indexed by :

http://journal.stainkudus.ac.id/indexing/crossref.jpghttp://journal.stainkudus.ac.id/indexing/moraref.jpghttp://journal.stainkudus.ac.id/indexing/ipi.jpghttp://journal.stainkudus.ac.id/indexing/academiaedu.jpghttp://journal.stainkudus.ac.id/indexing/googlescholar.jpghttp://journal.stainkudus.ac.id/indexing/sinta.jpghttp://journal.stainkudus.ac.id/indexing/isjd.jpg 

Creative Commons License
Iqtishadia : Jurnal Kajian Ekonomi dan Bisnis Islam is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

View My Stats