Rethinking Cooperative Deposit Protection in Indonesia: Governance Congruence, Institutional Resilience, and the Social Economy

Savings and credit cooperatives support financial inclusion, community-based economic participation, and the social economy in emerging countries, yet their protection mechanisms are often discussed through models designed for commercial banks. This article examines whether bank-based deposit insurance is institutionally suitable for Indonesian savings and credit cooperatives and how alternative protection arrangements can be designed without weakening cooperative governance. Using conceptual institutional analysis and comparative policy analysis, the article combines institutional economics, financial safety net theory, cooperative governance literature, Indonesian regulatory developments, and comparative lessons from European cooperative banking systems, particularly Germany’s Institutional Protection Scheme. The analysis shows that direct transplantation of bank-centric deposit insurance may create institutional mismatch because cooperative members may simultaneously act as owners, savers, borrowers, users, and governance participants. The article develops the Contextualized Cooperative Deposit Protection Design (CC-DPD) framework, integrating external protection with federated risk pooling, tiered eligibility, peer monitoring, early intervention, and governance-aligned incentives. It contributes to debates on institutional resilience, social economy sustainability, and inclusive financial governance by showing that financial safety nets are not institutionally neutral; their effectiveness depends on governance congruence between regulatory design and the organizational logic of the institutions they protect. In this article, cooperative deposit protection refers specifically to protection of member-savings claims rather than cooperative equity or ordinary commercial bank deposits.