Financial Service Penetration, Consumer Characteristic and Urban-Rural Difference — Empirical Evidence on Indonesia Financial Service Access

Abstract

By believing that financial inclusion (ownership of formal account) will increase economics resiliencies, in the middle of 2012, Worldbank Group had released 2011 Global Financial Inclusion Index (Global Findex) that measures financial service/product penetration and usage within 123 countries, which include Indonesia.Since Global Findex Report emphasize on national score, regional/continental comparison and assume that there is no significant socio-cultural difference within a country, there are no sufficient discussions toward consumer characteristics, cultures and urban-rural contexts within the reports. Our research approach is trying to fill the gap by focusing on consumer characteristic (psychographic), provincial-urban-rural difference and ownership of formal account (which include credit, insurance and investment penetration). The approach is taken in order to get better understanding toward the demand-side of Indonesia financial service sectors, several groups of consumers which come from multicultural background and social values difference.Data is covering 17 Indonesia provincial areas (Bali, Banten, Jakarta, Yogyakarta, West Java, Central Java, East Java, West Kalimantan, South Kalimantan, East Kalimantan, Lampung, Riau, South Sulawesi, West Sumatra, South Sumatra, North Sumatra and North Sulawesi) as proxy of 17 different socio-cultural characteristic. Data is gathered from Roy Morgan single source database, January-December 2009-2010 period, and processed through Asteroid 5 software. As predicted, financial service penetration and usage level are different, within provincial area and within psychographic classifications.