Operation management of rural banks of local government in the emerging market: An assessment of agency conflict or social responsibility

Rural banks with local government ownership as majority shareholders aimed to increase public welfare and earn profits. state-owned (also enterprises (SOEs)) also have agency conflict, which may due increased political content. Post-merger acquisition (Post-M&A) the COVID-19 pandemic increases rural bank risk in lending. The research objective is determine impact of on Data were collected from 32 annual reports Indonesia. Documentation was used collect data. Loan deposit ratio (LDR) dependent variable, independent capital adequacy (CAR), net profit margin (NPM), return equity (ROE) control variables. technique analyzing data an analysis covariance. result show below average a greater difference (0.0393) than above (0.0347). Another indicates that LDR not determined by bank’s health or business debtor. Government demands through financing government, it ignores risks produces risk-taking behavior managers. shareholder, has more effective monitoring role. Corporate social responsibility (CSR) oriented society demand been produced owned government.