THE IMPACT OF CHARACTERISTICS OF MICRO AND SMALL BUSINESS CUSTOMERS ON RURAL CREDIT CHANELLING

Roberto Akyuwen¹, Krisna Wijaya²

¹Finance Education and Training Center Jogjakarta, Ministry of Finance Republic Indonesia

²PT. Bank Danamon (Persero), Tbk., Jakarta, Indonesia

ABSTRACT

Micro and small businesses have played important role in the Indonesia’s economy. It have provided huge employment opportunities for low-skill workers and also contributed significantly to the economic growth. However, limited access to micro-financing, especially from the banks, is still restricts the development of the micro and small business activities in rural areas. Many banks have assumed that the characteristics of micro and small business actors were not meet their credit requirements. This research is aimed to analyze the impact of the characteristics of micro and small business actors on the quantity of rural credits (Kupedes) channeled by the BRI in Sleman, Jogjakarta. BRI is a stated-owned bank which has performed its operation by considering the characteristics of micro and small business actors in rural areas. The nine variables which have been used to represent the caracteristics include the level of education, age, level of income, collateral, duration as BRI’s customer, residency distance, gender, marriage status, and family size. The primary data were collected through questionnaire surveys in 17 BRI Units in Sleman and analyzed using a cross-section regression. The results shows that level of education, age, level of income, the use of collateral, and duration were the customer’s characteristics which have significant and positive impacts on the amount of Kupedes’s funds channeling. The residency distance also has significant but negative impact on the distribution of credit funds. On the contrary, gender, marriage status, and family size have no impact.

Keywords: micro and small businesses, characteristics, micro-financing, rural credits.