Implementation Of Good Corporate Governance In The Management Of Rural Banks In The District Sidoarjo

International Journal of Economics and Management Studies

© 2020 by SSRG - IJEMS Journal

Volume 7 Issue 11

Year of Publication : 2020

Authors : Lusy, Thyophoida W.S. Panjaitan

10.14445/23939125/IJEMS-V7I11P105

How to Cite?

Lusy, Thyophoida W.S. Panjaitan, "Implementation Of Good Corporate Governance In The Management Of Rural Banks In The District Sidoarjo," SSRG International Journal of Economics and Management Studies, vol. 7,  no. 11, pp. 34-37, 2020. Crossref, https://doi.org/10.14445/23939125/IJEMS-V7I11P105

Abstract:

The role of Rural Banks is very large in developing Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. MSMEs are large absorbers of labor and play an important role in economic growth in Indonesia. Government through Financial Services Authority (OJK) Regulation No. 4/POJK.03/2015 obliges Rural Banks to implement Governance. Corporate Governance is an internal control system that aims to manage its significant risks to meet its long-term business objectives. This study aims to see how the implementation of Good Corporate Governance (GCG) in the Management of Rural Banks in Sidoarjo Regency, using a qualitative approach. This research uses observation methods in the form of in-depth interviews, participant observation, and a list of questions that informants need to fill in. The results showed that the observed People's Credit Banks had implemented Governance following the Financial Services Authority (OJK) Regulation, seen from 5 pillars: Transparency, Accountability, Responsibility, Independence, and Fairness. The applied GCG also includes planning, management, and operational control of Rural Banks. Fulfillment of the required reports does not prevent fraud from occurring. With the implementation of GCG for Rural Banks, there is still a need for synergy between the Compliance Department and Internal Audit. As for the advice for the OJK as a policymaker, it is better to simplify the requested reports without reducing the risk of fraud so that Rural Banks can carry out their company operations optimally while still implementing good Governance, with the hope that Rural Banks can maintain Going Concern.

Keywords:

Rural Banks, MSME, Good Corporate Governance

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