Microfinance and microenterprise performance in Indonesia: an extended and updated survey

Purpose The purpose of this paper is to address the small, women micro-entrepreneur dominated and heterogeneity limitations of the Atmadja et al. (2016) study. The sample is much larger, includes more men and is more heterogeneous, which allows deeper insights and more meaningful explanation of the...

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Bibliographic Details
Published in:International journal of social economics 2018-01, Vol.45 (6), p.957-972
Main Authors: Atmadja, Adwin Surja, Sharma, Parmendra, Su, Jen-Je
Format: Article
Language:English
Subjects:
Economic models
Family owned businesses
Gender
Human capital
Hypotheses
Literature reviews
Meetings
Men
Microfinance
Money
Polls & surveys
Small business
Social capital
Variables
Women
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Summary:Purpose The purpose of this paper is to address the small, women micro-entrepreneur dominated and heterogeneity limitations of the Atmadja et al. (2016) study. The sample is much larger, includes more men and is more heterogeneous, which allows deeper insights and more meaningful explanation of the relationship between microfinance and microenterprise performance in the case of Indonesia, including the effects of gender, lending scheme and money separation. Design/methodology/approach This study used a survey of 556 respondents across five microcredit providers in the city of Surabaya using an updated instrument. Ordered probit is used to analyse data. Findings Microfinance may not matter for microenterprise performance in the case of Indonesia. Additionally, microcredit schemes (individual vs group) and gender may also not matter for performance, but money separation might have some influence. Practical implications Non-financial factors such as human capital, spousal involvement, and money separation should be considered as important factors for improving microenterprise business performance in Indonesia, with less focus on microcredit per se. Originality/value This study provides further evidence that microfinance may not matter for microenterprise performance in the case of Indonesia, a populous middle income country with a very long history of microfinance.
ISSN:0306-8293
1758-6712
DOI:10.1108/IJSE-02-2017-0031