THE ROLE OF MICRO FINANCIAL INSTITUTION TO IMPROVE SOCIO-ECONOMIC OF THE RURAL COMMUNITIES
Moh. Azis Arisudi
Fakultas Ekonomi Universitas Brawijaya.
Jl. MT. Haryono No.169 Malang, Indonesia
Salfarina Abdul Gapor
School of Social Sciences
UniversitiySains Malaysia, Minden, Penang, Malaysia
Micro financial institution had an important role to improve the socio-economic of the rural communities. However, in its effort, the result in improving the socio-economic of the rural communities, particularly among the poor is still low. The access for the rural communities for low interest credit was also limited. The objectives of this research were as follows. First, to analyze the factors that drove the rural communities to borrow money from micro credit institutions. Second, to analyze the role of micro credit institutions and its impacts on the rural communities’ socio-economic, Third, to analyze the rural communities’ coping strategies, Fourth, to evaluate the rural communities’ perceptions on micro credit interest rate. This research used both qualitative and quantitative methods. The results of this research were as follows. First, the factors causing rural communities to borrow money from micro credit institutions were to cover their living cost, provision and addition of capital. The micro credit institution had considerably lower interest rate than rentener, and the procedures were simple and fast. Second, the role of micro credit institutions to improve the rural communities socio-economic was still low. Third, the interest rate of the micro credit institutions was comparably fair and lower than the unlicensed micro bank.
Key words: micro credit, rural communities