The Key Factors in Determining the Successful of Female Enterprise Receiving KUR Product: Case Study of BRI Unit, Medan, Indonesia

Abstract

Microfinance plays a crucial role in alleviating poverty, and also in enhancing the business performance. Grameen Bank in Bangladesh, BancoSol in Bolivia, and Bank Rakyat Indonesia (BRI/ Indonesia People Bank) are the successful microfinance institutions (MFIs) in the world. These MFIs are not only successful in eradicating poverty, but also in motivating the business performance of enterprise, particularly the micro and small enterprises in their own country. This study focuses on the determinants of the success of female microenterprise in receiving KUR (Kredit Usaha Rakyat/ Credit loan for Small People) from one of the successful microfinance institutions, namely, BRI Unit in Medan City, North Sumatra, Indonesia. This study applies the methodology of the before and after approach for measuring the success. It utilizes some financial indicators to measure the success of the microenterprises, namely income, fixed assets, and household expenditure. The findings show that financing in terms of the amount of loan accessed has a positive relationship with success indicators in terms of changes in income and fixed assets. It is expected that policy makers of microfinance institutions (MFIs), including the BRI Unit and Indonesian government could solve the common problems faced by micro, small and medium enterprises (MSMEs), such as financing, raw materials, marketing, advanced technology, and others, as MSMEs play a crucial role in increasing economic growth in terms of reducing poverty and unemployment; and increasing GDP. In this respect, the policy makers of MFIs including the BRI Unit are also expected to provide the facilities besides credit services, such as training, health programmes, education, family planning, and other programmes to make greater effectiveness of the microfinance on the performance of microenterprises.  

Australian Academy of Business and Economics Review, vol 2, issue 3, July 2016, pp 208-233