Improving Access to Finance through Strengthening Supply and Demand-Side Factors

3/30/2016 12:00:00 AM

---

Improving Access to Finance through Strengthening Supply and Demand-Side Factors

 

ISBN: 978-979-8827-58-7

 

Authors:

Agustinus Prasetyantoko

Wahyoe Soedarmono

George Martin Sirait

Romora Edward Sitorus

Herry Pramono

Deno Hervino

 

 

For the lower-class people, saving is a luxury. They usually use up all of their monthly income for their daily needs. However, when they are asked whether they will be able to set aside an amount of, for instance 10,000 Rupiahs every day for their savings, their reply is that they can do that. Then, why don’t they save 10,000 Rupiahs every day? They say it is because it’s troublesome for them to go to a bank every day just to deposit a very small amount of money. Moreover, going to a bank for them is a formal activity, like, for instance, going to government offices or going to the market to do some shopping. For them, there are many constraints in accessing the formal financial institution, known as bank.

Furthermore, having no saving account, they cannot borrow any money from banks. Whereas, for them, access to finance is indispensable to expand their living and livelihoods. The link between access to finance, the ability to promote the productive sector as well as other factors that determine the dynamics of demand and supply-side factors, are the focus of this study.

In this study, surveys were conducted in four cities in Indonesia, aiming at household with small scale businesses, with the goal of evaluating the constraints both in terms of demand and supply to the practice of financial inclusion in Indonesia; a study which is still underdeveloped in Indonesia.

 

Research on financial inclusion in Indonesia still has many possibilities to be further developed. First, the practice of financial inclusion itself is still in the very early stage of development. Second, literature of research on financial inclusion in Indonesia is still scarce. This leads to the gap between the practice and the research. Therefore, this research could contribute to the discussion of this emerging issue.

It is really a prestigious opportunity for us at the Center for Society Development Studies (CSDS) Atma Jaya Catholic University of Indonesia, to be trusted with the research on financial inclusion. We extend our gratitude to Fransisca Indarsiani from Global Affairs Canada who convinced us to submit a proposal for this research. The discussion on the research project initially started from our publication in Asian Economic Policy Review, co-authored with Jay Rosengard from Harvard Kennedy School, titled “If the Banks are Doing So Well, Why Can‘t I Get a Loan? Regulatory Constraints to Financial Inclusion in Indonesia”.

 

We thank the research team, namely Martin Sirait, Wahyoe Soedarmono, Ramora Edward Sitorus and field researchers chaired by Deno Hervino, our statistician Herry Pramono and technical and administrative support chaired by Whidi Nugroho. Above all, we would like to express our deep gratitude to all participants in this research, namely related-government officers, bank officers, agents as well as respondents in four cities in Indonesia, without whom it would have been impossible to conclude the findings of this research.

The aim of this research is to give some recommendations to relevant stakeholders on this issue. We sincerely hope that we can really contribute to regulators, practitioner, as well as to the public.

 

Jakarta, March 22^nd, 2016

A.Prasetyantoko, Team Leader