Senin, 20 September 2010

The Role of Rural Bank in Poverty Alleviation in West Java

Roberto Akyuwen
Senior Lecturer, Finance Education and Training Center Yogyakarta
Ministry of Finance Republic Indonesia

I Dewa Gde Suthapa
President Director, PT. Mitraperkasa Abadi (Microfinance Consulting)
Jakarta, Indonesia


Abstract

Poverty incidence is a multi dimension phenomenon found in many developing and less developed countries include Indonesia. One of the main causes of poverty is a limited access of poor people to the financial capital. Many researchers have proved empirically that the development of microfinance institutions will have positive impacts on the poverty alleviation. A microfinance institution will provide working capital for poor people to start or develop micro and small businesses and increase their income. One of the microfinance institutions in Indonesia is the Bank Perkreditan Rakyat or generally called Rural Bank. This bank is designed as a solution for micro and small business actors in accessing financial capital when they are not able to serve by the regular banks include state-owned banks and private banks. This research is aimed at analyzing the role of Rural Bank in supporting poverty alleviation by channeling credit to the micro and small businesses in West Java Province. The data were collected from 50 Rural Banks and 100 microfinance institutions in 13 Regencies/Cities in West Java Province. The primary data were collected through questionnaire survey, interviews, and focused group discussion. Total number of survey respondents was 268 people. They were consisted of 66 employees of Rural Banks and 202 micro and small business actors. These respondents were chosen by using purposive sampling method. The tool of analysis used was included descriptive statistics and simple hypothesis test. It was found that the existing Rural Banks have not played optimum role in alleviating poverty. The growth of credit channeling provided by the Rural Banks in the period of 1995-2006 was not, in fact, followed by the reduction of total number of poor people. The progress of Rural Banks in West Java was lower than national level in the terms of saving and deposit, credit, and asset growth. Besides, the percentage of non-performing loan of Rural Banks in West Java was also higher than the national average. However, the credit channeled by Rural Banks has significantly increased the gross of income of micro and small businesses in West Java. Internally, the performance of Rural Banks in credit chanelling was influenced by human resource quality and capital adequacy. Meanwhile, externally, it was impacted by government regulations, macroeconomic condition, and social security factors.

Key words: microfinance institution, micro and small business, poverty alleviation, Rural Bank.

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