Analysis of the Influence of Internal and External Factors on the Financial Inclusion of BPR (People's Credit Banks) in Bali Province

Abstract

Inclusive economic growth is economic growth that is equitable and involves all economic sectors that require financial inclusion for the society. Bank is a financial institution that not only functions as an intermediary institution, but also as a provider of financial services in increasing financial inclusion. Rural Banks (BPR) are financial institutions that play a role in building the Bali economy, experiencing a decline in performance over the last 5 years, on the other hand there is still a disparity in financial inclusion between districts and city. This study aims to investigate the influence of internal and external factors on the financial inclusion of BPRs in Bali. With the financial inclusion strategy set by the government, how will the strategy and its impact on financial inclusion and performance that have an impact on financial inclusion? The rapid development of technology over the last decade and the application of local wisdom by BPRs in Bali, how will this affect BPR's financial inclusion? This study used a saturated sample involving 126 BPR. Data were collected through questionnaires and in-depth interviews from informants. Furthermore, the collected data were analysed using descriptive analysis techniques and SEM-PLS. From the results of the study, it can be concluded that internal factors have a direct positive and insignificant effect on financial inclusion. External factors have a positive and significant direct effect on financial inclusion. Financial inclusion strategy mediates the influence of internal and external factors on financial inclusion. Financial performance mediates the influence of internal factors on financial inclusion and does not mediate the influence of external factors on financial inclusion. Technology has a positive and significant effect on performance, but does not moderate the financial inclusion strategy. Local wisdom services have a positive and insignificant effect on performance but moderate financial inclusion strategies. From the evaluation of the inner model, Stone Geiser's Q-Square test (Q2 ) was obtained equal to 0.776, meaning that the results of the study have a high predictive prevalence. The results of this study are expected to contribute to the theoretical repertoire of financial inclusion that encouraging financial inclusion of financial institutions, a strategy wrapped in local wisdom services from the perspective of Tri Kaya Parisudha's behavioral values, is important to implement.