Structural Capital Mediates Human Capital Effect Based on Asta Brata Against Financial Performance of People's Rural Banks in Bali

Abstract

The purpose of this study is to examine and explain the effect of human capital and structural capital on the financial performance of Rural Credit Banks in Bali, both in direct and indirect relationships. This study uses a mixed research design, a research method that combines quantitative and qualitative research designs. The population in this study is conventional BPRs in the Province of Bali, totaling 136 BPRs (Bank Indonesia, 2016), with a sample of 60 BPRs in Bali. The unit of analysis is 60 BPR leaders. Quantitative analysis based on multivariate analysis uses structural equation modeling or SEM (structural equation modeling) with a variance based or component based approach called PLS (partial least square). The results of this study indicate that: Human capital has no significant effect on the financial performance of Rural Credit Banks in Bali Province; Human capital and structural capital have a significant positive effect on the financial performance of Rural Credit Banks in Bali Province; Structural capital is able to fully mediate the influence of human capital on the financial performance of Rural Credit Banks in Bali. The novelty of this research are 1) examining intangible asets, namely human capital and structural capital on BPR financial performance in Bali, 2) human capital in this study is to explore leadership based on local Balinese concepts called Astabrata leadership. Some limitations of research and suggestions for further research are as follows: (a) Behavioral research is vulnerable to bias, so it needs to be tested in the future; (b) Results cannot be disputed because they are only carried out in the banking sector, namely BPR, so a comparative test is needed between BPRs with commercial banks, cooperatives or LPDs in Bali.

Human Capital as a Mediating Factor of Structural Capital and Value Addition

“…A study on people´s rural banks in Bali, Indonesia, by Ayu et al (2019), found out that while human capital did not have a significant effect on the financial performance of those banks when mediated by structural capital, its influence on the financial performance of the banks increased.…”

Analysis of Financial Variables on Conventional BPR Performance

“…BPR is limited by various requirements, so it cannot act freely for commercial banks. The limitations of BPR activities are also associated with the mission of establishing BPR itself (Ayu et al, 2019).…”