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The impact of microfinance on Indonesian rural households' welfare

Author

Listed:
  • Danang Budi Santoso
  • Christopher Gan
  • Mohamad Dian Revindo
  • Natanael Waraney Gerald Massie

Abstract

Purpose - This study investigates the welfare impact of microfinance on rural households in Indonesia. Its finding will bridge the gap in the Indonesian microfinance literature. Design/methodology/approach - The research was conducted by collecting primary data and administering a structured questionnaire to rural households in Bantul District, Yogyakarta Province, Indonesia. We employed the logistic model to measure welfare impacts of microcredit borrowers. Findings - The research finds that purpose of loan, monthly income, monthly expenditure, interest rates, loan amount, education and marital status have significant effects on the probability of increasing borrowers' welfare after accessing microcredit. Practical implications - This study will propose some policy recommendations for Indonesian policymakers that may yield better strategies to help improve the impact of their microcredit programmes on the welfare of rural households. Originality/value - The authors confirm that the article has not been submitted to peer review, nor is in the process of peer reviewing and nor has been accepted for publishing in another journal. The author(s) confirms that the research in their work is original, and that all the data given in the article are real and authentic.

Suggested Citation

  • Danang Budi Santoso & Christopher Gan & Mohamad Dian Revindo & Natanael Waraney Gerald Massie, 2020. "The impact of microfinance on Indonesian rural households' welfare," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 80(4), pages 491-506, March.
    • Handle: RePEc:eme:afrpps:afr-11-2018-0098
    DOI: 10.1108/AFR-11-2018-0098
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    Citations

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    Cited by:

    1. Kuldeep Singh & Madhvendra Misra & Jitendra Yadav, 2021. "Corporate social responsibility and financial inclusion: Evaluating the moderating effect of income," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(5), pages 1263-1274, July.
    2. Abera Alemu & Zerhun Ganewo, 2023. "Impact Analysis of Formal Microcredit on Income of Borrowers in Rural Areas of Sidama Region, Ethiopia: A Propensity Score Matching Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 65-85, March.
    3. Dewi Ratna Sjari Martokoesoemo & Bonar M. Sinaga & Nunung Kusnadi & Yusman Syaukat, 2020. "Business Vulnerability and Credit Access for Agriculture-Based Micro and Small Women Entrepreneurs," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 66, pages 97-111, Desember.

    More about this item

    Keywords

    Microfinance; Poverty; Indonesia; Impact; Logistic model; G21; I32; R51; Q14;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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