Provincial corruption and local development bank performance

Murharsito Murharsito, Fitri Ella Fauziah, Emanuel Kristijadi, Rr. Iramani


This paper investigates the effect of provincial corruption on the performance of local development bank, specifically to the profitability and credit quality. We use the data of 26 local development banks in 2012 and 2013. For the provincial corruption measurement we use “Public Institution Openness Indexâ€. Results of this study are first, corruption significantly has a negative effect on the profitability of local development bank. Second, corruption doesn’t affect the credit quality of local development bank. These results are expected to enrich the within country corruption effect to the economic studies, particularly to the local development bank which is infrequently investigated.


provincial corruption, regional development bank, profitability, credit quality

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Bentzen, J.S. (2012). How bad is corruption? Cross-country evidence of the impact of corruption on economic prosperity. Review of Development Economics, 16(1), 167–184.


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Economic Journal of Emerging Markets (EJEM)

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