MICROFINANCE AND ITS IMPACT ON INDONESIAN SMALL TO MEDIUM SIZE ENTERPRISE PRODUCTIVITY FOR DEVELOPMENT

• Main Author: CHRISTANTO (NIM 19014186), YOSUA
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/24804
• Institution: Institut Teknologi Bandung

Microfinance is a type of program implemented by different type of banks. The fundamental concept of microfinance is to provide capital for all kinds of people from various social strata. One of the products of microfinance is micro loans. These loans tend to have minimum interest rate and give to SME’s (Small and Medium Enterprises).The product of microfinance has increased the bank's revenue. However, its impact on <br /> <br /> the economy, in general, is not recorded well especially in Indonesia, there is a lot of research related with microfinance. However, there are few empirical studies. <br /> <br /> Microfinance has the potential to improve the economy of the nation. The real essence of micro financing activities are still unknown, one of the primary reason is that there are contradicting research results about the effectiveness of microfinance activities to reduce poverty and how significant is it to a country’s economy.By using panel regression which is a statistical tool to measure a relationship between dynamic variables, this method is applied to provide new insights, clarity regarding the impact of credit towards the productivity of SME and the conclusion, that will <br /> <br /> boost the government to take action and make access to credit much easier. To maximize objectivity and reliability, the research will utilize data from all 32 provinces in Indonesia with the time range from 2011-2014.Findings showed that quantity of microloans distributed (QML), HDI are the variables that significantly influences the productivity of MSME. QML & HDI movements contradict with the productivity of MSME. These results reflected the present condition of Indonesia regarding public views, education, and regulation relating to the productivity of MSME in Indonesia. Therefore it is necessary for the government <br /> <br /> to improve the appliance of entrepreneurial education in its education system to improve the productivity of MSME. <br />