The Existence of Village Credit Institutions (LPD) in an Effort to Maintain Local Wisdom and Financial Globalization

Abstract

Objectives: The objective of this study is to explore the integration of Village Credit Institutions (LPD) within the Indonesian financial system, considering their significance as embodiments of local wisdom and community identity in Bali.
 
 Methods: This research employs a qualitative approach, drawing upon legal analysis and comparative examination of national and local regulations pertinent to Village Credit Institutions. Data collection involves reviewing relevant legislation such as Law Number 4 of 2023 and Law Number 1 of 2013, alongside Bali Provincial Regulation Number 3 of 2017. Additionally, this study incorporates insights from community members and legal experts familiar with the operation of LPDs.
 
 Results: The analysis reveals a complex interplay between national financial regulations and local customary practices, particularly concerning the governance and operation of Village Credit Institutions. LPDs serve as vital components of Bali's economic fabric, embodying local wisdom and community cohesion. However, discrepancies may exist between national laws and customary practices, necessitating careful consideration for the harmonization of legal frameworks to sustain the integrity of LPDs within the broader financial system.
 
 Conclusion: In conclusion, the study underscores the importance of aligning national legislation with local customs to preserve the role of Village Credit Institutions as guardians of local identity and economic stability. To achieve this, policymakers must prioritize the incorporation of diverse local wisdoms into the regulatory framework, fostering synergy between customary practices and formal legal structures. By upholding the integrity of LPDs within the national financial system, Indonesia can honor its cultural heritage while promoting inclusive economic development at the grassroots level.