BALANCED SCORECARD AS A STRATEGIC FRAMEWORK FOR FINANCIAL PERFORMANCE IN RURAL BANKS: A LITERATURE REVIEW ON EFFECTIVENESS AND IMPLEMENTATION CHALLENGES
Keywords:
Balanced Scorecard, Rural Banks, Financial Performance, MicrofinanceAbstract
This paper explores how the Balanced Scorecard (BSC), a strategic performance framework widely applied in corporate environments, is adapted within rural banking institutions across Southeast Asia and other developing regions. Rural banks, often operating under resource constraints, serve as critical enablers of microeconomic development and financial inclusion. However, their application of strategic tools such as the BSC remains limited, fragmented, and poorly documented. This paper addresses the research gap by focusing on how BSC is implemented in community-based financial institutions and the extent to which it supports performance improvement in these contexts. Unlike prior studies centered on urban or large-scale banking environments, this review highlights the unique challenges, leadership dynamics, and cultural adaptations involved in applying BSC in rural settings. Using a narrative literature review method, the study synthesizes findings from 30 peer-reviewed articles published between 2011 and 2025. A thematic analysis revealed four dominant themes: (1) the effectiveness of BSC in enhancing financial performance and strategic focus, (2) the role of leadership and organizational readiness, (3) persistent barriers such as limited human capital, digital literacy, and infrastructure gaps, and (4) the integration of BSC with innovation, risk management, and digital transformation. Grounded in Contingency Theory and the Resource-Based View (RBV), the findings underscore that successful BSC implementation requires more than just technical application, it demands internal capability, strategic alignment, and sensitivity to local socio-institutional realities. This study contributes to the growing discourse on performance measurement in developing economies by contextualizing BSC in rural banking, and it offers practical insights for policymakers, rural bank leaders, and development stakeholders seeking to strengthen institutional resilience and accountability in underserved regions.
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