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Transformation of financial institutions grants from the government to inclusive financial institutions in Indonesia

Low-income communities have limited capital and access to money or loans from formal financial institutions. To solve the problems, the government provides solutions, one of them is by forming a microfinance program, namely Rural Agribusiness Business Development (PUAP). PUAP program is one of the g...

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Autores principales: Darwis, Valeriana, Rachmawati, Rika R., Muslim, Chairul, Chanifah, Sembiring, Asma, Ilham, Nyak, Mufidah, Lyli, Suhartini, Sri H., Basuki, Rofik S., Rina, Yanti, Suharyon, Nurdin, Maryam, Dahya, Damanik, Mario, Dewi, Dina O.
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Public Library of Science 2023
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10289368/
https://www.ncbi.nlm.nih.gov/pubmed/37352218
http://dx.doi.org/10.1371/journal.pone.0286482
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author Darwis, Valeriana
Rachmawati, Rika R.
Muslim, Chairul
Chanifah
Sembiring, Asma
Ilham, Nyak
Mufidah, Lyli
Suhartini, Sri H.
Basuki, Rofik S.
Rina, Yanti
Suharyon
Nurdin, Maryam
Dahya
Damanik, Mario
Dewi, Dina O.
author_facet Darwis, Valeriana
Rachmawati, Rika R.
Muslim, Chairul
Chanifah
Sembiring, Asma
Ilham, Nyak
Mufidah, Lyli
Suhartini, Sri H.
Basuki, Rofik S.
Rina, Yanti
Suharyon
Nurdin, Maryam
Dahya
Damanik, Mario
Dewi, Dina O.
author_sort Darwis, Valeriana
collection PubMed
description Low-income communities have limited capital and access to money or loans from formal financial institutions. To solve the problems, the government provides solutions, one of them is by forming a microfinance program, namely Rural Agribusiness Business Development (PUAP). PUAP program is one of the grant activities to farmer group association (Gapoktan) with a total capital assistance of IDR 100 million. The problem with the 52,186 Gapoktan units that participated in PUAP activities, only 7,703 units (15%) were transformed into Agribusiness Microfinance Institutions (LKMA). This paper differs from others as it briefly explains the PUAP/MFI’s institutional transformation and the factors that affect its sustainability, which is so far still limited discussed. The paper aims to see what transformations Gapoktan becomes an inclusive LKMA and the level of sustainability of the LKMA. The research was conducted in Kendal Regency, Central Java- Indonesia, in 2022 on 5 LKMA. The process of transforming LKMA into an inclusive financial institution is analyzed descriptively. LKMA sustainability levels were analyzed using a multidimensional scaling (MDS) approach with the Rapfish application. So far, MDS with the Rapfish application is still very limited for microfinance analysis. MDS analysis is employed because it is relatively simple and effective for looking at sensitive attributes in improving sustainability and generating leverage attributes that can be used for policy-making. The result study shows that the transformation of PUAP into LKMA is driven by the ability to improve legality, financial governance and diversify the customer’s business field. The five LKMAs have a sustainability status of ’sufficient’ in running their business, with an index value of more than 50%. The study recommends 1) the Indonesian government could assist LKMA in improving its legality and 2) LKMA’s management should get training by experts to improve its financial capability to manage the cost saving.
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spelling pubmed-102893682023-06-24 Transformation of financial institutions grants from the government to inclusive financial institutions in Indonesia Darwis, Valeriana Rachmawati, Rika R. Muslim, Chairul Chanifah Sembiring, Asma Ilham, Nyak Mufidah, Lyli Suhartini, Sri H. Basuki, Rofik S. Rina, Yanti Suharyon Nurdin, Maryam Dahya Damanik, Mario Dewi, Dina O. PLoS One Research Article Low-income communities have limited capital and access to money or loans from formal financial institutions. To solve the problems, the government provides solutions, one of them is by forming a microfinance program, namely Rural Agribusiness Business Development (PUAP). PUAP program is one of the grant activities to farmer group association (Gapoktan) with a total capital assistance of IDR 100 million. The problem with the 52,186 Gapoktan units that participated in PUAP activities, only 7,703 units (15%) were transformed into Agribusiness Microfinance Institutions (LKMA). This paper differs from others as it briefly explains the PUAP/MFI’s institutional transformation and the factors that affect its sustainability, which is so far still limited discussed. The paper aims to see what transformations Gapoktan becomes an inclusive LKMA and the level of sustainability of the LKMA. The research was conducted in Kendal Regency, Central Java- Indonesia, in 2022 on 5 LKMA. The process of transforming LKMA into an inclusive financial institution is analyzed descriptively. LKMA sustainability levels were analyzed using a multidimensional scaling (MDS) approach with the Rapfish application. So far, MDS with the Rapfish application is still very limited for microfinance analysis. MDS analysis is employed because it is relatively simple and effective for looking at sensitive attributes in improving sustainability and generating leverage attributes that can be used for policy-making. The result study shows that the transformation of PUAP into LKMA is driven by the ability to improve legality, financial governance and diversify the customer’s business field. The five LKMAs have a sustainability status of ’sufficient’ in running their business, with an index value of more than 50%. The study recommends 1) the Indonesian government could assist LKMA in improving its legality and 2) LKMA’s management should get training by experts to improve its financial capability to manage the cost saving. Public Library of Science 2023-06-23 /pmc/articles/PMC10289368/ /pubmed/37352218 http://dx.doi.org/10.1371/journal.pone.0286482 Text en © 2023 Darwis et al https://creativecommons.org/licenses/by/4.0/This is an open access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/) , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
spellingShingle Research Article
Darwis, Valeriana
Rachmawati, Rika R.
Muslim, Chairul
Chanifah
Sembiring, Asma
Ilham, Nyak
Mufidah, Lyli
Suhartini, Sri H.
Basuki, Rofik S.
Rina, Yanti
Suharyon
Nurdin, Maryam
Dahya
Damanik, Mario
Dewi, Dina O.
Transformation of financial institutions grants from the government to inclusive financial institutions in Indonesia
title Transformation of financial institutions grants from the government to inclusive financial institutions in Indonesia
title_full Transformation of financial institutions grants from the government to inclusive financial institutions in Indonesia
title_fullStr Transformation of financial institutions grants from the government to inclusive financial institutions in Indonesia
title_full_unstemmed Transformation of financial institutions grants from the government to inclusive financial institutions in Indonesia
title_short Transformation of financial institutions grants from the government to inclusive financial institutions in Indonesia
title_sort transformation of financial institutions grants from the government to inclusive financial institutions in indonesia
topic Research Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10289368/
https://www.ncbi.nlm.nih.gov/pubmed/37352218
http://dx.doi.org/10.1371/journal.pone.0286482
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