Abstract
The purpose of the research is to find the right strategic formula to resolve bad loans suitable to environment and characteristics of micro-financial institutions and their consumers. It applies qualitative approach by means of interactive method put forward by Milles and Huberman (2009) as analysis method. Data are obtained from indepth interview with superordinates, staff and consumers of microfinance institutions in Kendari city. A microcredit institution “Harum” needs several strategis to handle bad loans. It includes: institutional reinforcement (improvement in service procedure, increase in human resources’ skill, more branch offices, more new recuitments, the involvement of sub-district government, the use of information system), reinforcement of consumers’ capacity (tight selection process, counseling of business management, advisory service, and special relationship). The research results serve as solutions to microfinancial institutions in handling bad loans, from which development and sustainability can be assured. Consumers might make use of this information to develop their business. They also might serve as references for regional government in making the right policy for the development of micofinancial institutions and small business empowerment. This is the first study exploring formulation of strategy for microfinancial institutions in handling bad loans. The research explores internal and external aspects of microfinancial institution, with holistic view of the right policy in terms of institutions and consumers.
Highlights
The growth of microfinancial institutions provides financial support to small business which commonly suffers from a very limited access to bank
The results of the analysis show that the variables of family workers and hired workers significantly influence the ratio of income-investment after joining the microcredit program. (Tammili, Mohamed, & Terano, 2018)
The study found that microcredit The research focuses on microcredit institution programs had a significant positive impact on “Harum” in Kendari city given that it is the only household income, expenditure and savings
Summary
The growth of microfinancial institutions provides financial support to small business which commonly suffers from a very limited access to bank. In March 2017, 76 percent [2,448] of customers suffered from bad loans with total value of Rp. 1.295.644.000 – the issue of ways to return high growth is always intriguing. It entails formulation of the right strategy suitable to environment and the characteristics of microcredit institution and its consumers. The main purpose of the research is to explore the formulation of strategy of bad loan treatment suitable to environment and characteristics of microcredit institution and its customers, from which the return to its growth and high performance becomes possible
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