Open AccessTHE EFFECT OF SAVING ACCOUNT OWNERSHIP AND ACCESS TO FINANCIAL INSTITUTIONS ON HOUSEHOLD LOANS IN INDONESIA
Author(s) -
Robby Maulana,
Chaikal Nuryakin
Publication year - 2021
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 4
ISSN - 2460-9196
DOI - 10.21098/bemp.v24i3.1428
Subject(s) - multinomial logistic regression , business , credit history , government (linguistics) , financial institution , finance , order (exchange) , socioeconomic status , sample (material) , financial system , population , linguistics , philosophy , chemistry , demography , chromatography , machine learning , sociology , computer science
This study investigates whether saving account ownership and access to financial institutions influence household credit in Indonesia. Using a multinomial logit regression model and a sample of 294,426 households from the 2018 national socioeconomic survey and the village potential data, we find that account ownership is essential in encouraging formal credit and reducing informal credit. Access to commercial banks, rural banks, and cooperatives can then improve formal credit without significantly reducing informal credit. Hence, the government needs to encourage bank account ownership and facilitate access to financial institutions in order to promote formal credit and reduce informal credit.