The Impact of People’s Business Credit (KUR) on Economic Growth in the Agricultural Sector of West Nusa Tenggara

Research Originality — The existing literature offers limited empirical evidence on the role of targeted government credit programs in the agricultural sector as a strategy for mitigating the impacts of climate change. This study addresses this gap by examining the specific impact of the Kredit Usaha Rakyat (KUR) program on agricultural economic growth in a climate-vulnerable region. Research Objectives — The research aims to assess the effect of KUR on economic growth in the agricultural sector of West Nusa Tenggara, Indonesia. Research Methods - An explanatory research design was employed, using data on KUR distribution, rice production, and Gross Regional Domestic Product from 2019 to 2023. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4.0, a method well-suited for complex predictive models. Empirical Result — The findings reveal that KUR has a positive and significant impact on rice production, and rice production, in turn, is a vital driver of the region's economic growth. However, the distribution of KUR does not directly contribute to economic growth without the intermediary effect of increased rice production. Implications — This study provides policymakers with evidence that targeted credit programs can be an effective tool for stimulating agricultural output and regional economic growth, underscoring the need for coordinated efforts among government bodies and credit distributors.