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Financial Inclusion: Household Access to Credit in Indonesia


  • Beta Y. Gitaharie

    () (Department of Economics, Faculty of Economics, University of Indonesia)

  • Lana Soelistianingsih

    (Department of Economics, Faculty of Economics, University of Indonesia)

  • Triasih Djutaharta

    (The Demographic Institute, Faculty of Economics, University of Indonesia)


Literatures on financial development and economic growth nexus have rapidly grown. Over more than a decade, research topics have been extended to a wider nexus of financial sector development-economic growth-and poverty alleviation. Regarding to the topic, access to finance becomes an important one. The World Bank (2010) reports only 21% of Indonesia's population has access to banks and another 2% engages in other formal financial services. The figure shows that access to financial services in Indonesia is still very low. This study is to examine determinant factors that deter households from access to financial services, particularly business credits. The study employs desciptive analysis and performs microeconometric exercise utilizing the 2008 and 2012 Susenas data. The results of the study provide the household profile and identify determinant factors for households to access business credit from several sources, namely bank, non-bank, and individual. The probabilities for household to obtain business credit is affected by the demographic characteristics (age, sex, marrital status, location, education) and social-economic factors (employment sector, employment status, status of poverty) and the effectiveness of the implementation of banking public education program. The study employs multinomial logit method. The findings of this study is vital in providing policy recommendation to alleviate poverty in Indonesia.

Suggested Citation

  • Beta Y. Gitaharie & Lana Soelistianingsih & Triasih Djutaharta, 2014. "Financial Inclusion: Household Access to Credit in Indonesia," Working Papers in Economics and Business 201401, Faculty of Economics and Business, University of Indonesia, revised Jan 2014.
  • Handle: RePEc:lpe:wpecbs:201401

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    References listed on IDEAS

    1. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 717-737.
    2. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    3. Claessens, Stijn, 2006. "Access to financial services: a review of the issues and public policy objectives," Journal of Financial Transformation, Capco Institute, vol. 17, pages 16-19.
    4. Cameron,A. Colin & Trivedi,Pravin K., 2008. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9787111235767, December.
    Full references (including those not matched with items on IDEAS)

    More about this item


    financial sector; access; business credit; households; poor; poverty;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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