Don’t (Community) Bank on it: How the Current Regulatory Framework and New Federal Regulations Threaten the U.S. Community Banking Industry

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Predicting The Impact of Commercialization Factors on The Social Mission of Islamic Microfinance Institutions for Muslim Community

<p class="abstrak">As a community banking operating in Islamic principles, Islamic rural banks are faced with two performance targets namely financial performance and social performance which are both interrelated. This study examined the impact of commercialization factors covering profitability, regulation, and competition on the social performance of Islamic rural banks. This study was quantitative research based on a survey on six units of Islamic rural banks in West Sumatera province of Indonesia from 2012 to 2018. Data collected from the publication of financial services authority and other financial documents at Islamic rural banks then analyzed with panel data regression. The findings of this research showed that profitability and competition influenced social performance. Meanwhile, there was no regulation’s impact on social performance. Regulatory factors that were initially expected to strengthen the social responsibility mission of Islamic rural banks, did not stimulate the increase of social performance. This study reveals the importance of the commercialization factor in improving the social performance of Islamic rural banks by increasing the social benefits through providing financial services for the low-income Muslim community.</p><p class="abstrak" align="left"> <em>Sebagai sebuah community banking yang beroperasi dalam prinsip-prinsip Islam, BPR Syariah dihadapkan pada dua target kinerja yaitu kinerja keuangan dan kinerja sosial yang keduanya saling terkait. Penelitian ini bertujuan untuk menguji dampak dari faktor-faktor komersialisasi yang meliputi profitabilitas, regulasi dan kompetisi terhadap kinerja sosial BPR Syariah. Penelitian ini menggunakan pendekatan kuantitatif berdasarkan survei pada enam unit BPR Syariah di provinsi Sumatera Barat Indonesia dari tahun 2012 hingga 2018. Data dikumpulkan dari publikasi Otoritas Jasa Keuangan dan dokumen keuangan lainnya di BPR Syariah kemudian dianalisis dengan regresi data panel. Hasil penelitian ini menunjukkan bahwa profitabilitas dan persaingan berpengaruh terhadap kinerja sosial, sedangkan regulasi tidak berpengaruh terhadap kinerja sosial. Faktor regulasi yang semula diharapkan memperkuat misi tanggung jawab sosial BPR syariah, ternyata tidak merangsang peningkatan kinerja sosial. Studi ini mengungkap akan pentingnya faktor komersialisasi dalam meningkatkan kinerja sosial BPR syariah dengan meningkatkan manfaat sosial melalui pemberian layanan keuangan untuk masyarakat muslim berpenghasilan rendah.</em></p><p class="abstrak"> </p>

Community Banking Institutions

Changes in the regulatory environment and technological advances have dramatically changed the competitive landscape for community banking institutions. While only accounting for a fraction of the overall size of the banking industry, community banks are predominant in numbers around the world for a broad range of depository institution types, including commercial banks, savings banks, cooperative banks, and credit unions. The steep decline in the number of community banks in recent times has attracted concern from policymakers, regulators, and academics, and has raised questions on the potential consequences associated with the gradual disappearance of these institutions. What contributed to the growth and resilience of community banks over the past century? Can they remain competitively viable in the current environment? This chapter surveys the literature and provides an institutional overview to understand the continued evolution of these institutions.

Subnational Governance and Development

This chapter examines how the practice of governance, especially at a subnational level, has been evolving since the 1990s, focusing on the implications for “community governance”. An overview of recent thinking on the nature of governance opens up the question of whether “governance” may be exercised through institutions entirely separate from government. Examples are considered from Australia's experience with “community banking”, and from trusts and foundations that have emerged from major public sector restructuring. The chapter considers the work of the Global Fund for Community Foundations as an important civil society contribution to subnational governance in developing countries, examining the role of foundations in building capacity and capability in disadvantaged communities through a new approach grounded in an understanding of “community governance”. Overall the chapter argues for a broadening in the understanding of governance, from what governments do to encompassing how our communities come together to shape their own futures.