Do Debtor's Business and Welfare Better? Study on Ultra Micro Financing Program in Indonesia

Dwitya Nurpramana; Tatang Ary Gumanti; Julia Safitri; Eka Handriani

doi:10.55927/ijba.v3i6.6966

Authors

Dwitya Nurpramana Universitas Terbuka
Tatang Ary Gumanti Universitas Terbuka
Julia Safitri Universitas Terbuka
Eka Handriani Universitas Terbuka

DOI:

https://doi.org/10.55927/ijba.v3i6.6966

Keywords:

Ultra-Micro Financing, Debtor, Business, Welfare

Abstract

Ultra Micro Financing is a government program that aims to improve the welfare of micro, small and medium businesses. This article aims to analyse the influence of Ultra Micro Financing on business and debtor welfare. There are 234 debtors as respondents. Analysis uses the Wilcoxon signed rank test. The variables for the debtor's business are business assets and business turnover, while debtor welfare are electricity costs and consumption expenditure. The results show that there has been an increase in the average debtor business as measured by business assets per year, increasing by 38.94% and business turnover per year increasing by 18.50%. Debtor welfare as measured by monthly electricity costs increased by 9.64% and per capita consumption expenditure per week increased by 12.50%.

Downloads

Download data is not yet available.

References

Anggela, N. L. (2022). Cara Jadi Penyalur Pembiayaan Ultra Mikro (UMi). Bisnis.Com. https://ekonomi.bisnis.com/read/20220813/9/1566471/cara-jadi-penyalur-pembiayaan-ultra-mikro-umi

Armendáriz, B., & Morduch, J. (2010). The Economics of Microfinance. MIT Press.

Banerjee, A., Chandrasekhar, A. G., Duflo, E., & Jackson, M. O. (2013). The Diffusion of Microfinance. Science, 341(6144), 1236498. https://doi.org/10.1126/science.1236498

Belwal, R., Tamiru, M., & Singh, G. (2012). Microfinance and sustained economic improvement: Women small-scale entrepreneurs in Ethiopia. Journal of International Development, 24(S1), S84–S99. https://doi.org/https://doi.org/10.1002/jid.1782

Bos, J. W. B., & Millone, M. (2015). Practice What You Preach: Microfinance Business Models and Operational Efficiency. World Development, 70, 28–42. https://doi.org/https://doi.org/10.1016/j.worlddev.2014.12.018

Churchill, A. S. (2020). Microfinance financial sustainability and outreach: is there a trade-off? Empirical Economics, 59(3), 1329–1350. https://doi.org/10.1007/s00181-019-01709-1

Cull, R., Demirgüç-Kunt, A., & Morduch, J. (2009). Microfinance Meets the Market. Journal of Economic Perspectives, 23(1), 167–192. https://doi.org/10.1257/jep.23.1.167

D’Espallier, B., Goedecke, J., Hudon, M., & Mersland, R. (2017). From NGOs to Banks: Does Institutional Transformation Alter the Business Model of Microfinance Institutions? World Development, 89, 19–33. https://doi.org/https://doi.org/10.1016/j.worlddev.2016.06.021

de Koker, L., & Jentzsch, N. (2013). Financial Inclusion and Financial Integrity: Aligned Incentives? World Development, 44, 267–280. https://doi.org/https://doi.org/10.1016/j.worlddev.2012.11.002

DeLoach, S. B., & Lamanna, E. (2011). Measuring the Impact of Microfinance on Child Health Outcomes in Indonesia. World Development, 39(10), 1808–1819. https://doi.org/https://doi.org/10.1016/j.worlddev.2011.04.009

Elahi, K. Q.-I., & Rahman, M. L. (2006). Micro-Credit and Micro-Finance: Functional and Conceptual Differences. Development in Practice, 16(5), 476–483. http://www.jstor.org/stable/4030042

Elsafi, M. H., Ahmed, E. M., & Ramanathan, S. (2020). The impact of microfinance programs on monetary poverty reduction. World Journal of Entrepreneurship, Management and Sustainable Development, 16(1), 30–43. https://doi.org/10.1108/WJEMSD-05-2019-0036

Fletschner, D., & Kenney, L. (2014). Rural Women’s Access to Financial Services: Credit, Savings, and Insurance BT - Gender in Agriculture: Closing the Knowledge Gap (A. R. Quisumbing, R. Meinzen-Dick, T. L. Raney, A. Croppenstedt, J. A. Behrman, & A. Peterman (eds.); pp. 187–208). Springer Netherlands. https://doi.org/10.1007/978-94-017-8616-4_8

Garikipati, S., Johnson, S., Guérin, I., & Szafarz, A. (2017). Microfinance and Gender: Issues, Challenges and The Road Ahead. The Journal of Development Studies, 53(5), 641–648. https://doi.org/10.1080/00220388.2016.1205736

Giné, X., Jakiela, P., Karlan, D., & Morduch, J. (2010). Microfinance Games. American Economic Journal: Applied Economics, 2(3), 60–95. http://www.jstor.org/stable/25760220

Guérin, I., Servet, J.-M., & Labie, D. (2015). The Crises of Microcredit. University of Chicago Press.

Hansen, N., Huis, M. A., & Lensink, R. (2021). Microfinance Services and Women’s Empowerment BT - Handbook on Ethics in Finance (L. San-Jose, J. L. Retolaza, & L. van Liedekerke (eds.); pp. 161–182). Springer International Publishing. https://doi.org/10.1007/978-3-030-29371-0_4

Hermes, N., Lensink, R., & Meesters, A. (2011). Outreach and Efficiency of Microfinance Institutions. World Development, 39(6), 938–948. https://doi.org/https://doi.org/10.1016/j.worlddev.2009.10.018

Ibrahim, A. H., & Bauer, S. (2013). Access to Micro credit and its Impact on Farm Profit among Rural Farmers in Dryland of Sudan. Global Advanced Research Journal of Agricultural Science, 2(3), 88–102. http://garj.org/full-articles/access-to-micro-credit-and-its-impact-on-farm-profit-among-rural-farmers-in-dryland-of-sudan.pdf

Ibtissem, B., & Bouri, A. (2014). Credit Risk Management In Microfinance : The Conceptual Framework.

Imai, K. S., & Azam, M. D. S. (2012). Does Microfinance Reduce Poverty in Bangladesh? New Evidence from Household Panel Data. The Journal of Development Studies, 48(5), 633–653. https://doi.org/10.1080/00220388.2012.661853

Imtiaz, A., Mehmood, H. Z., Akram, W., & Irfan, M. (2014). Impact of Microfinance on Poverty Reduction: A Case Study of District Faisalabad. Journal of Economics and Sustainable Development, 5(9). https://www.iiste.org/Journals/index.php/JEDS/article/view/13214/13329

Kaboski, J. P., & Townsend, R. M. (2012). The Impact of Credit on Village Economies. American Economic Journal: Applied Economics, 4(2), 98–133. http://www.jstor.org/stable/41419437

Karlan, D. S., & Zinman, J. (2008). Credit Elasticities in Less-Developed Economies: Implications for Microfinance. American Economic Review, 98(3), 1040–1068. https://doi.org/10.1257/aer.98.3.1040

Khavul, S. (2010). Microfinance: Creating Opportunities for the Poor? Academy of Management Perspectives, 24(3), 58–72. http://www.jstor.org/stable/29764974

Kristianus, A. (2022). PIP Gencarkan Penyaluran Pinjaman Ultramikro ke Seluruh Indonesia. https://investor.id/business/300923/pip-gencarkan-penyaluran-pinjaman-ultramikro-ke-seluruh-indonesia

Lange, A., List, J. A., & Price, M. K. (2007). A fundraising mechanism inspired by historical tontines: Theory and experimental evidence. Journal of Public Economics, 91(9), 1750–1782. https://doi.org/https://doi.org/10.1016/j.jpubeco.2007.05.001

Laucereno, S. F. (2022). Cara Dapat Bantuan Kredit Ultra Mikro dari Pemerintah. Finance.Detik.Com. https://finance.detik.com/moneter/d-6199401/cara-dapat-bantuan-kredit-ultra-mikro-dari-pemerintah

Ledgerwood, J. (2013). The New Microfinance Handbook : A Financial Market System Perspective. World Bank. https://openknowledge.worldbank.org/handle/10986/12272

Mader, P. (2013). Rise and Fall of Microfinance in India: The Andhra Pradesh Crisis in Perspective. Strategic Change, 22(1–2), 47–66. https://doi.org/https://doi.org/10.1002/jsc.1921

Mader, P. (2015). The Financialization of Poverty BT - The Political Economy of Microfinance: Financializing Poverty (P. Mader (ed.); pp. 78–120). Palgrave Macmillan UK. https://doi.org/10.1057/9781137364210_3

Maldonado, L. Y., Songok, J. J., Snelgrove, J. W., Ochieng, C. B., Chelagat, S., Ikemeri, J. E., Okwanyi, M. A., Cole, D. C., Ruhl, L. J., & Christoffersen-Deb, A. (2020). Promoting positive maternal, newborn, and child health behaviors through a group-based health education and microfinance program: a prospective matched cohort study in western Kenya. BMC Pregnancy and Childbirth, 20(1), 288. https://doi.org/10.1186/s12884-020-02978-w

Mercy, J. (2012). An Analysis of Microfinance And Poverty Reduction in Bayelsa State of Nigeria.

Miled, K. B. H., & Rejeb, J.-E. Ben. (2015). Microfinance and Poverty Reduction: A Review and Synthesis of Empirical Evidence. Procedia - Social and Behavioral Sciences, 195, 705–712. https://doi.org/https://doi.org/10.1016/j.sbspro.2015.06.339

Montgomery, H., & Weiss, J. (2011). Can Commercially-oriented Microfinance Help Meet the Millennium Development Goals? Evidence from Pakistan. World Development, 39(1), 87–109. https://doi.org/https://doi.org/10.1016/j.worlddev.2010.09.001

Morduch, J. (1999a). The role of subsidies in microfinance: evidence from the Grameen Bank. Journal of Development Economics, 60(1), 229–248. https://doi.org/https://doi.org/10.1016/S0304-3878(99)00042-5

Morduch, J. (1999b). The Microfinance Promise. Journal of Economic Literature, 37(4), 1569–1614. http://www.jstor.org/stable/2565486

Morduch, J., Littlefield, E. L., & Hashemi, S. (2003). Is microfinance an effective strategy to reach the Millennium Development Goals.

Mosley, P., & Hulme, D. (1998). Microenterprise finance: Is there a conflict between growth and poverty alleviation? World Development, 26(5), 783–790. https://doi.org/https://doi.org/10.1016/S0305-750X(98)00021-7

Nawaz, S. (2010). Microfinance and Poverty Reduction: Evidence from a Village Study in Bangladesh. Journal of Asian and African Studies, 45(6), 670–683. https://doi.org/10.1177/0021909610383812

Nogueira, S., Duarte, F., & Gama, A. P. (2020). Microfinance: where are we and where are we going? Development in Practice, 30(7), 874–889. https://doi.org/10.1080/09614524.2020.1782844

Nukpezah, J. A., & Blankson, C. (2017). Microfinance Intervention in Poverty Reduction: A Study of Women Farmer-Entrepreneurs in Rural Ghana. Journal of African Business, 18(4), 457–475. https://doi.org/10.1080/15228916.2017.1336915

PIP. (2022). Pembiayaan Ultra Mikro (UMi) untuk Mewujudkan Indonesia Maju. https://pip.kemenkeu.go.id/id/data-publikasi/berita-terbaru/137-pembiayaan-ultra-mikro-umi-untuk-mewujudkan-indonesia-maju.html

Quayes, S. (2012). Depth of outreach and financial sustainability of microfinance institutions. Applied Economics, 44(26), 3421–3433. https://doi.org/10.1080/00036846.2011.577016

Quayes, S. (2015). Outreach and performance of microfinance institutions: a panel analysis. Applied Economics, 47(18), 1909–1925. https://doi.org/10.1080/00036846.2014.1002891

Rahman, M. T., & Khan, H. T. A. (2012). The effectiveness of the microcredit programme in Bangladesh. Local Economy, 28(1), 85–98. https://doi.org/10.1177/0269094212466036

RBI. (2020). Micro Credit. https://rbidocs.rbi.org.in/rdocs/notification/PDFs/11680.pdf

Rini, A. S. (2015). Ini Alasan Bunga Kredit UMKM Relatif Tinggi. Bisnis.Com. https://finansial.bisnis.com/read/20150615/90/443628/ini-alasan-bunga-kredit-umkm-relatif-tinggi

Sehrawat, M., & Giri, A. K. (2016). Financial development, poverty and rural-urban income inequality: evidence from South Asian countries. Quality & Quantity, 50(2), 577–590. https://doi.org/10.1007/s11135-015-0164-6

Seng, K. (2018). Rethinking the Effects of Microcredit on Household Welfare in Cambodia. The Journal of Development Studies, 54(9), 1496–1512. https://doi.org/10.1080/00220388.2017.1299139

Sengsourivong, K., & Mieno, F. (2015). Impacts of Savings Groups Programs on Household Welfare in Laos: Case Study of the Vientiane Vicinity during the Mid-2000s ( Savings Groups in Laos from a Comparative Perspective). Southeast Asian Studies, 3, 85–111.

Tedeschi, G. (2010). Chapter 10: Microfinance: Assessing its Impact on Microenterprises. Edward Elgar Publishing. https://doi.org/10.4337/9781849808040.00015

Terberger, E. (2013). The Microfinance Approach: Does It Deliver on Its Promise? BT - Microfinance 3.0: Reconciling Sustainability with Social Outreach and Responsible Delivery (D. Köhn (ed.); pp. 181–195). Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-41704-7_9

Tsai, K. S. (2004). Imperfect Substitutes: The Local Political Economy of Informal Finance and Microfinance in Rural China and India. World Development, 32(9), 1487–1507. https://doi.org/https://doi.org/10.1016/j.worlddev.2004.06.001

United Nations Capital Development Fund. (2015). Inclusive Finance—Increasing Access to Financial Services. https://www.uncdf.org/download/file/127/1882/fipabrochurepdf

van Rooyen, C., Stewart, R., & de Wet, T. (2012). The Impact of Microfinance in Sub-Saharan Africa: A Systematic Review of the Evidence. World Development, 40(11), 2249–2262. https://doi.org/https://doi.org/10.1016/j.worlddev.2012.03.012

Weiss, J., Montgomery, H., & Kurmanalieva, E. (2003). Micro Finance and Poverty Reduction in Asia: What is the Evidence? ABD Institute Research Paper, 53. https://dx.doi.org/10.2139/ssrn.1396983

Woller, G. (2007). Trade-Offs between Social and Financial Performance. Journal of Microfinance / ESR Review, 9(2), 5. https://scholarsarchive.byu.edu/esr/vol9/iss2/5

Wry, T., & Zhao, E. Y. (2018). Taking Trade-offs Seriously: Examining the Contextually Contingent Relationship Between Social Outreach Intensity and Financial Sustainability in Global Microfinance. Organization Science, 29(3), 507–528. https://doi.org/10.1287/orsc.2017.1188

Wydick, B. (2002). Microfinance among the Maya: Tracking the Progress of Borrowers. Development and Change, 33(3), 489–509. https://doi.org/https://doi.org/10.1111/1467-7660.00264

Yunus, M. (2008). Banker to the Poor: Micro-Lending and the Battle against World Poverty. PublicAffairs.

Zamore, S., Beisland, L. A., & Mersland, R. (2019). Geographic diversification and credit risk in microfinance. Journal of Banking & Finance, 109, 105665. https://doi.org/https://doi.org/10.1016/j.jbankfin.2019.105665

Žiaková, M., & Verner, V. N. (2015). Microfinance As A Tool For Poverty Reduction: A Study Of Jordan. Scientia Agriculturae Bohemica, 46, 172–180.