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The Convergence of Beta Credit for Micro, Small and Medium Enterprises (MSMEs) in Indonesia’s Provinces

Author

Listed:
  • I Made Suidarma

    (Department of Management, University of Pendidikan Nasional Denpasar, Bali, Indonesia)

  • I Made Sara

    (Department of Economics, Warmadewa University, Bali, Indonesia)

  • I Nyoman Anggaradana

    (Department of Accounting, University of Pendidikan Nasional Denpasar, Bali, Indonesia)

  • I Gusti Ayu Made Agung Mas Andriani Pratiwi

    (Department of Economics, University of Tabanan, Bali, Indonesia)

Abstract

The success of SMEs is determined by the business capital and able to give value added to the business more productively. Various financing pattern schemes for SMEs have been provided in various regions and all economic sectors. However, the development of SMEs credit is still concentrated in several regions in Indonesiathis can lead to inequality in the growth of SMEs. This study aims to analyze the convergence of absolute beta and conditional beta in the Provinces in Indonesia and calculate the half-time or time required to achieve steady-state conditions of the SME credit convergence process. Convergence test used is beta conditional convergence and absolute convergence with the monthly time period during 2017.1 until 2017.7. The determinant of SMEs convergence of credit in Indonesia is a number of third-party funds. The model used is dynamic panel data regression and the estimation method used is Arellano-Bond Generalized Method of Moment (AB-GMM). The results of the study show that during the study period, there has been a convergence credit process in Indonesia for both absolute and conditional convergence models. The conditional beta-convergence model provides a smaller beta value than the absolute model. The speed of credit growth convergence between provinces in Indonesia with half-time of 6.94 months for the absolute model and the half-time of 6.96 months for the conditional model

Suggested Citation

  • I Made Suidarma & I Made Sara & I Nyoman Anggaradana & I Gusti Ayu Made Agung Mas Andriani Pratiwi, 2018. "The Convergence of Beta Credit for Micro, Small and Medium Enterprises (MSMEs) in Indonesia’s Provinces," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 7(1), pages 33-42, January.
    • Handle: RePEc:rbs:ijfbss:v:7:y:2018:i:1:p:33-42
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    References listed on IDEAS

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