The Role of Banking Capital in Industrial Sector Micro Enterprises for Poverty Alleviation: A Study in East Java, Indonesia

Atik Purmiyati, Madeline Berma, Basri Abdul Talib, Marta Sabila Rakhima

Research output: Contribution to journalArticle

Abstract

This study examines the micro enterprises of industrial sectors that receive Kredit Usaha Rakyat (People's Business Credit/KUR) or Commercial Credit (KK) in seven cities in East Java. Firstly, this study aims to measure the technical efficiency of micro enterprises in the industrial sector in East Java that accept KUR and KK using the Data Envelopment Analysis method; secondly, to examine the factors that influence the technical efficiency of micro enterprises, which receive KUR and KK with Tobit Regression. Unlike others' researches, this paper attempts to determine the influence of technical efficiency and other factors on the poverty status of micro entrepreneurs using logistic regression. The average technical efficiencies of KUR and KK recipient micro businesses using the assumptions of the DEA VRS model are 0.94 and 0.77. While the average technical efficiencies of KUR and KK recipient micro businesses using the assumptions of the DEA CRS model are 0.88 and 0.71. The factors that influence the technical efficiency of micro enterprises recipients of KUR and KK are profit, experience, geographical location, amount of credit, KUR access, the credit realization period, and dummy variable of food and beverage products. The factors that influence the poverty status of micro-entrepreneurs are technical efficiency, income, KUR access, gender, number of household member, and geographical location. The results of this research can be a material consideration for the government in formulating policies.

Original languageEnglish
Pages (from-to)131-142
Number of pages12
JournalFoundations of Management
Volume11
Issue number1
DOIs
Publication statusPublished - 1 Jan 2019

Fingerprint

Poverty alleviation
Technical efficiency
Indonesia
Banking
Micro-enterprises
Industrial sector
Java
Influence factors
Credit
DEA model
Entrepreneurs
Poverty
Micro businesses
Factors
Income
Profit
Logistic regression
Data envelopment analysis
Household
Food and beverage

Keywords

  • micro credit
  • micro enterprise
  • poverty
  • technical efficiency

ASJC Scopus subject areas

  • Strategy and Management

Cite this

The Role of Banking Capital in Industrial Sector Micro Enterprises for Poverty Alleviation : A Study in East Java, Indonesia. / Purmiyati, Atik; Berma, Madeline; Abdul Talib, Basri; Rakhima, Marta Sabila.

In: Foundations of Management, Vol. 11, No. 1, 01.01.2019, p. 131-142.

Research output: Contribution to journalArticle

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