Rural Credit Institutions Research Articles

Can Fintech development improve the financial inclusion of village and township banks? Evidence from China

Enhancing the financial inclusion of financial institutions enables more vulnerable groups to obtain opportunities to access loans—an essential prerequisite for achieving the United Nations' Sustainable Development Goals. The main purpose of this study is to explore whether the development of Fintech impacts the financial inclusion of village and township banks (VTBs). Using the micro survey data of 900 VTBs, this paper empirically analyzes the impact of financial technology on the financial inclusion of VTBs and explores the mediating role of mobile banking adoption. The results demonstrate that the development of Fintech can improve the financial inclusion of VTBs through the application of mobile banking. Notably, VTBs can significantly contribute to financial inclusion by adopting an online and offline service model, though mobile banking is substituting physical branches with the rapid development of financial technology. Further analysis finds that the development of Fintech has prompted VTBs to increase the inclusiveness of loans to rural households, loans to poor households, and loans to small and micro enterprises. Furthermore, rural credit institutions and city commercial banks as the main shareholders are conducive to strengthening the role of Fintech in promoting the financial inclusion of VTBs. Finally, the development of Fintech has a stronger competitive incentive for VTBs located in the eastern regions.

The Effect of Potential Rush Money and Fraud on the Need for External Audit in Rural Credit Institutions with Leadership Idealism as a Moderating Variable

This study aims to examine the effect of potential rush money and fraud on the need for external audit in Rural Credit Institutions (LPD) with leadership idealism as a moderating variable. This study used the head of the LPD in Bali Province who is still actively operating as a population. The method of determining the sample used is the purposive sampling method. Data analysis used SEM-PLS (Structural Equation Modeling-Partial Least Square) Version 3. The result shows that the potential for rush money has a positive effect on the need for external audit services for Rural Credit Institutions, which indicates that the potential for rush money that is likely to be experienced is capable of increasing the need for external audit services. The result shows that the potential for fraud has a positive effect on the need for an external audit of the Rural Credit Institution, which indicates a potential for fraud that may be experienced can increase the need for external audit services. The results show that the idealism of the leadership can strengthen the influence of the potential rush of money on the need for an external audit of Rural Credit Institutions and the idealism of the leadership can increase the influence of potential fraud on the need for external audit services for Rural Credit Institutions. Therefore, rural credit institutions need to pay attention to the importance of conducting regular external audits to ensure that their business practices are running well and in accordance with established standards.

A comparative study on the reform of rural credit cooperatives under the strategy of rural revitalization

Rural credit cooperatives are the main force serving “agriculture, rural areas and farmers” in China. Zhejiang and Shaanxi are the first pilot provinces of the rural credit cooperative reform in China. The research on the reform of rural credit cooperatives in Jiaxing, Zhejiang and Yan 'an, Shaanxi shows that there are significant regional differences in the reform and development of rural credit cooperatives. Yan'an rural credit institutions play a more prominent role in supporting agriculture, but Jiaxing rural credit institutions have comparative advantages in overall operational efficiency, anti-risk ability, profit model and other aspects. On this basis, it is proposed to follow the principle of “six insistence” in promoting the reform of rural credit cooperatives, continuously improve the operating capacity of rural credit cooperatives, and promote the supply side structural reform of rural finance.

Pembebanan Hak Tanggungan dalam Pemberian Kredit Pada Lembaga Perkreditan Desa (LPD)

In 1984, the Provincial Government of Bali issued an idea to help the pakraman village in carrying out its cultural function. With Governor's Letter Number 972 of
 1984, November 1, 1984 concerning Village Credit Institutions. This type of research is normative research, the source of legal material consists of primary and secondary legal materials. Analysis of legal materials with interpretation analysis. The results of the study show that the granting of credit to rural Credit Institutions with guaranteed mortgage rights, is set forth in a credit agreement between the LPD and the customer who is also required to get approval from adat Bendesa, in this case to apply adat sanctions when bad credit occurs. The position of adat "sanctions" is as a last resort after other efforts have not been successful with the aim that credit arrears can be repaid. In the application of strict and objective adat "sanctions", it is very necessary, because the adoption of adat "sanctions" based on the existence of nepotism elements can cause a crisis of the banjar / adat community members' trust in the existence of prajuru and awig-awig who have been highly respected and obeyed. Bali Provincial Governor Regulation No. 44 of 2017 binds to the imposition of mortgage rights in the granting of loans to the LPD that only applies to the local traditional village, in this case the LPD is a savings and loan business entity owned by the customary village. Therefore, from the very beginning in the credit agreement an effort was made to form a binding agreement according to the awig-awig of the traditional village and which appeared in the recommendations of the management. If a bad credit occurs, it can be resolved in a village paruman by imposing customary "sanctions" which are part of the power in resolving any violations or disputes that are there because of original autonomy, namely in an effort to provide legal protection for one of its assets. And bad credit customers who do not carry out the obligations as set forth in the credit agreement are imposed with confiscation of collateral that is bound by the imposition of mortgage rights for immovable property.

Peran Moderasi Indeks Pembangunan Manusia Pada Hubungan Resiko Kredit Dan Resiko Likuiditas, Total Aset Dengan Kinerja Keuangan Lembaga Perkreditan Desa (LPD)

Penelitian ini didasarkan oleh peran strategik Lembaga Perkreditan Rakyat (LPD) untuk mewujudkan kemandirian masyarakat dalam memelihara Budaya dengan memberikan sumbangan sumber daya ekonomi kepada Desa Pekraman untuk mendukung pelaksanaan tugas dan tanggung jawabnya. Model konseptual yang diusulkan memasukkan elemen resiko likuiditas, resiko kredit dan potensi ekonomi wilayah untuk memprediksi kinerja keuangan LPD dikabupaten Badung dan kabupaten Bangli. Berdasarkan data yang disajikan pada laporan keuangan organisasi LPD periode 2016. Hipotesis penelitian bertujuan membuktikan apakah potensi ekonomi wilayah memoderasi hubungan resiko likuiditas dan resiko kredit dengan profitabilitas mengingat LPD adalah penyedia jasa keuangan bagi masyarakat diwilayah Adat tertentu. Hasil penelitian diharapkan memberikan informasi terkait bagaimana hubungan resiko likuiditas dan resiko kredit dengan kinerja keuangan LPD yang berlokasi diwilayah berbeda dengan Indeks Pembangunan Manusia sebagai proxi Kualitas SDM yang tidak sama untuk merumuskan strategi pemerataan potensi ekonomi, pengembangan operasional LPD dan manajemen resiko operasional LPD.

Aktivitas Sosial, Aktivitas Budaya Dan Agama Terhadap Dana Pihak Ketiga Lembaga Perkreditan Desa (LPD) (Case Kabupaten Tabanan Bali)

This study aimed to determine the existence of social activities, cultural activities, religious activities on third party funds LPD Tabanan Regency in 2017. The study was conducted in all LPD in Tabanan Regency. The method of determining the sample used in this study is the saturated sampling method and obtained 243 LPD that meet the criteria for sampling. The type of data used is in the form of quantitative data, namely LPD financial reports registered throughout Tabanan Regency. The analytical method used is the classic assumption test, multiple regression analysis, analysis of determination, F-Test and t-test. The results of this study indicate that social activities, cultural activities and religious activities have a significant positive effect on LPD third party funds. The implications of this research for rural credit institutions, strived to continue to improve the empowerment of third party funds for social, cultural and religious activities carried out in the village.

What Do Banks, Rural Credit Institutions, and Regulators Infer from the Current Strengths and Standing of Indonesian SMEs?

This study investigates whether the Indonesian regulators control Indonesian small and medium-sized enterprises (SMEs) with matching or mismatching empowerment strategies, in light of their strengths and current standing. Indonesian SMEs contributed approximately 60.34% to Indonesia’s gross domestic product (GDP) in 2018. In addition, Indonesian regulators have focused on financial support through credit policies and tax incentives. Indonesian SMEs have been standing on organizational readiness and readiness for change, based on their social networks and social cognition. It collected thirteen informants with different expertise and experiences. This study’s results suggest Indonesia’s regulatory body and financial institutions should consider the SMEs’ social cognition and organizational readiness for change. According to the current situation, to empower Indonesian SMEs, we recommend strategies such as achieving knowledge supremacy, creating an economic development board, as in Singapore, formulating comprehensive industry-wide policies, adopting omnibus laws, and implementing a shifting balance strategy. In other words, the Indonesian regulators should implement major reforms, which are similar to glasnost and perestroika in the former Soviet Union. This is to enhance Indonesian SMEs and achieve the goal of the Government of Indonesia (GoI) with respect to the optimal distinctiveness of Indonesia’s future economy. This optimal distinctiveness refers to the GoI’s policies, which focused on knowledge supremacy, an industry-wide regime, and research for empowerment.

Analysis of Factors Influences Fraudulent Tendencies in Denpasar Rural Credit Institutions

Accounting fraud often occurs and increases in several countries and organizations. The deviant action in financial statements is one of the accounting fraudulent actions. The impact and consequences of accounting fraud cannot be avoided and microfinance institution will suffer losses due to this action. This study aims to examine and obtain empirical evidence of the effectivity of internal control effectiveness, information asymmetry, compliance with accounting rules and management morality towards accounting fraudulent tendencies in Rural Credit Institutions (LPD) in Denpasar City. Data is obtained by giving questionnaires to the leadership and accounting staff at the Rural Credit Institution (LPD) in Denpasar City. Determination of the sample using purposive sampling method. The sample in this study were 70 respondents. The analytical tool used is multiple linear regression analysis. The data obtained were analyzed using the Statistical Package for Science (SPSS) program. The results showed that the effectiveness of internal control and management morality had a negative effect on accounting fraud tendencies. While information asymmetry and compliance with accounting rules do not affect the tendency of accounting fraud.

PENGARUH WORD OF MOUTH DAN LOKASI TERHADAP KEPUTUSAN MENGAMBIL KREDIT DI LEMBAGA PERKREDITAN DESA “MARTO NUGROHO” DESA ROWOMARTO KECAMATAN PATIANROWO KABUPATEN NGANJUK

Penelitian ini bertujuan untuk 1) Menganalisis pengaruh word of mouth terhadap keputusan pengambilan kredit dilembaga perkreditan desa “marto nugroho” desa rowomarto kecamatan patianrowo kabupaten nganjuk, 2) Menganalisis pengaruh lokasi terhadap keputusan pengambilan kredit dilembaga perkreditan desa “marto nugroho” desa rowomarto kecamatan patianrowo kabupaten nganjuk, 3) menganalisis word of mouth dan lokasi terhadap keputusan pengambilan kredit dilembaga perkreditan desa “marto nugroho” desa rowomarto kecamatan patianrowo kabupaten nganjuk. Populasi dalam penelitian ini adalah seluruh nasabah aktif dan non aktif lembaga perkreditan desa “marto nugroho yang berjumlah 150 orang. Jumlah sampel yang digunakan adalah 60 responden dengan teknik penentuan sampel menggunakan rumus Slovin. pengambilan data dengan menggunakan kuisioner. Teknik analisa data menggunakan analisis regresi linier berganda dengan uji t untuk menganalisis pengaruh parsial dan uji F untuk menganalisis pengaruh simultan. Berdasarkan analisis tersebut diperoleh bahwa tingkat signifikan uji F sebesar 0,000 (p<0,05), hal ini berarti word of mouth dan lokasi berpengaruh signifikan terhadap keputusan pengambilan kredit di lembaga perkreditan desa “marto nugroho” desa rowomarto kecamatan patianrowo kabupaten nganjuk. Disisi lain berdasarkan hasil uji t dapat diketahui bahwa secara parsial word of mouth berpengaruh signifikan terhadap keputusan pengambilan kredit di lembaga perkreditan desa “marto nugroho” desa rowomarto kecamatan patianrowo kabupaten nganjukt signifikansi 0,000 (p<0,05). Sedangkan lokasi secara parsial juga berpengaruh signifikan terhadap keputusan pengambilan kredit di lembaga perkreditan desa “marto nugroho” desa rowomarto kecamatan patianrowo kabupaten nganjuk dengan nilai signifikansi uji t sebesar 0,000 (p>0,05). Variabel word of mouth lebih dominan berpengaruh karena nilai beta lebih besar dibanding variabel lokasi yaitu 0,466

Rural Credit and Community Relationships in a Northern Vietnamese Village

The purpose of this paper is to examine the conditions of success in rural credit in developing countries, based on the investigation of a Vietnamese case. The rural credit institutions in Vietnam have achieved splendid results, compared with those in other Asian countries. Some studies of rural credit in Vietnam have paid attention to the group lending scheme based on the Grameen Bank model or to social ties among borrowers. However, these studies did not show howgroup lending and social ties function in the rural credit system, so the author interview ed people in a northern Vietnamese village. The author found that joint liability groups formed by borrowers are just nominal and have no provision for borrowers’ default. Nevertheless, the bank loans have rapidly penetrated many villagers, and have never been defaulted. This is because the entire hamlet participates in monitoring. Almost all social activities here take place in hamlets. If someone causes trouble in a hamlet, it may result in economic and social sanctions from others, including non-borrowers. However, young villagers with non-agriculture income are under less economic pressure to follow the rules of behavior that have traditionally governed interactions in their hamlets. The author concludes that Vietnamese rural credit has succeeded by depending on rural communities characteristic of Vietnam, but an effective monitoring system must be created.

Religious Communal of Indigenous Peoples in Improving Economy Through Local Wisdom (A Juridical Study on Rural Credit Institution in Bali)

Rural Credit Institution is a financial institution that is specifically located in Pakraman (customary villages) in Bali. The presence of Rural Credit Institution in Bali adjoined to other bank financial institutions such as Commercial Banks and Rural Banks are widespread throughout the province of Bali. Rural Credit Institutions as a financial institution acquire legality under Article 58 of Act No. 7 of 1992 in conjunction with Act No. 10 of 1998 which provides status as Rural Banks. Local wisdom that owned by Rural Credit Institutions, has the scope of business activities, the types of activities and financial transactions are limited in Pakraman as the target area. Customers who save funds or require a loan to be registered as local residents aimed at empowering communities. It is a characteristic of religious communal of Bali’s people for business activities in the village. The uniqueness in the Rural Credit Institutions is the local wisdom of Bali’s people that can be maintained and not be crushed by globalization.

Religious Communal of Indigenous Peoples in Improving Economy Through Local Wisdom (A Juridical Study on Rural Credit Institution in Bali)

Rural Credit Institution is a financial institution that is specifically located in Pakraman (customary villages) in Bali. The presence of Rural Credit Institution in Bali adjoined to other bank financial institutions such as Commercial Banks and Rural Banks are widespread throughout the province of Bali. Rural Credit Institutions as a financial institution acquire legality under Article 58 of Act No. 7 of 1992 in conjunction with Act No. 10 of 1998 which provides status as Rural Banks. Local wisdom that owned by Rural Credit Institutions, has the scope of business activities, the types of activities and financial transactions are limited in Pakraman as the target area. Customers who save funds or require a loan to be registered as local residents aimed at empowering communities. It is a characteristic of religious communal of Bali’s people for business activities in the village. The uniqueness in the Rural Credit Institutions is the local wisdom of Bali’s people that can be maintained and not be crushed by globalization.

Information Technology Implementation on Socialization of Harmonious Culture in Bali

The research objective is to build a model of information delivery harmonious culture that is run by Village Credit Institutions (LPD) through information technology to rural communities so that financial performance can be improved. Thirty-five rural credit institutions which meet the criteria were used empirically as a sample. Data such as the practice of cultural values harmony collected through in-depth interviews were then analyzed using descriptive method and ethnomethodology. The model is built starting with the collection of data from each row, perform data classification into three categories of cultural harmony, making a website that contains information on the activities of cultural harmony, then mounting internet in each row to facilitate public access to information on the implementation of cultural harmony. Results of model simulations for three months showed that the level of community participation increased by an average of five percent through credit lending and credit issues decreased by 3.5 percent. Cultural harmony is practiced by 55% in touch with the God, 35% related to humans, and 10% related natural premises. Results of this study implied that IT is no longer expensive but able to create a better performance.

Village Level Analysis of Credit and Livelihood Enhancement of Microfinance in Andhra Pradesh

Micro finance as an institution are seen to have characteristics that help to solve the problems of moral hazard and adverse selection, which are the existing problems of rural credit institutions which other institutions failed to do. Group lending, peer monitoring and joint liability systems solve the adverse selection and moral hazard issues associated with rural credit markets. This study also focused in finding out the impact of micro finance programme on poverty, money lenders, women empowerment and living standards of the rural poor based on the primary and secondary data collected from Kamavarapukota mandal in Andhra Pradesh in India. Using primary data collected from the filled survey through the constructive schedules and personal interview to estimates the linkages between microfinance and its impacts on rural credit facilities, dependency ratio of money lenders for their credit needs, reduction of rural poverty, and empowerment of women in socio-economic activities. The conclusion of this study, clearly states that the introducing microfinance inducing the overall improvements of their credit facilities as well as augmentations of their livelihood facilities in different sections of the society. Further positive effects of this programme is that to reinforcements of vulnerable groups or targeted population Particularly, SCs, STS, OBCs and other weaker section of the society directly to empower and to participate in social, economic,  and political activities

Transformation of Credit Delivery for the Poor through SHG–Bank Linkage Programme: Retrospect & Prospects

Despite rapid branch expansion, priority sector lending norms and thrust on pro-poor and rural credit schemes, in the post-nationalization period, a vast segment of the population, particularly the poor and disadvantaged, did not have access to the existing financial institutions. There were serious aberrations in the credit delivery mechanism and schemes. An earnest search was made for an alternative credit delivery approach for the vulnerable section of the community. In this backdrop, NABARD based on the learnings from the action research and intensive consultations with all concerned, launched a pilot project on SHG–Bank Linkage Programme (SHG–BLP) in 1992, by combining the mutual strength of formal credit institutions (banks) and informal agencies (SHGs), linking savings with credit and focusing on relationship banking. With the success of the pilot scheme, it was mainstreamed in 1996. The programme has been nurtured with multi-pronged promotional efforts and creation of a conducive policy environment by NABARD with the support of the Government and RBI. Banks and NGOs have played significant roles in upscaling and deepening the programme. Now, the programme in a gradual process has become a national movement and the world’s largest microfinance programme in terms of size and outreach. It has transformed the whole approach of all players in dealing with the poor, rural credit and rural financial institutions and the voluntary sector. It has brought about socio-economic empowerment of the poor, particularly women, as evidenced from various impact studies. Most of the rural development schemes and livelihood programmes incorporated the SHG approach. For sustaining quality and effectiveness of the SHG–Bank Linkage Programme, emerging issues like regional imbalance, promotion of micro-enterprises/livelihood, capacity/institution building efforts for managing growth, adoption of technology and continued supportive policy environment need to be addressed. The SHG–BLP has the potential and propensity to transform the entire rural India.

How Similar to South-Eastern Europe Were the Islands of Cyprus and Malta in Terms of Agricultural Output and Credit? Evidence During the Interwar Period

The paper is part of an ongoing process of estimating the GDP of Cyprus and Malta for the interwar period. The islands of Cyprus and Malta have always been considered as similar economically to other South-Eastern European states, despite the lack of historical evidence to prove it. The paper uses recently complied primary sector output estimates for the interwar period (1921 – 1938) to evaluate that the economic structure of the islands was different from each other, as well as from other South-Eastern European states. The output of the agricultural sector per capita indicated that the islands were not keeping up to other Southern-European States. Recovery of the primary sector in Cyprus came from the rapid expansion of copper mining and not from the growth of agriculture. The different growth trajectory of the islands lies partly to their differing economic structure. Malta’s economy was exceptional due to the high urbanisation of the island, leading to the economy’s dependency on the presence of the British navy. Cyprus shared the South-Eastern European problems of high population growth rates, fragmented land holdings, and poor rural credit institutions which combined in such a way to prevent a shift towards other agricultural products. The inefficiency of the credit system in Cyprus was particularly important in checking the agricultural sector’s growth.

Credit procurement and utilization by rural farmers from selected rural Credit Institutions in Imo State, Nigeria

This study examines the procurement and utilization of credit by the rural farmers from selected rural credit institutions for sustainable agricultural production and development in Imo State, Nigeria. Two sets of structured questionnaires were administered to the 220 respondents (loan beneficiaries) and the credit institutions respectively. The results showed that an average loan volume of N29,562.27 was granted per beneficiary while only 56.01%of this amount was utilized for production and about 30.95% was diverted for consumption. An increase in the amount of loan per beneficiary to take care of both the production and consumption needs of the rural farmers is recommended. This will enable the beneficiaries to purchase agricultural inputs and thereby adopt yield increasing innovations and techniques thus jettisoning the out modelled and outdated equipment for sustainable production.Keywords: credit procurement, utilization, credit institutions, sustainable productionInternational Journal of Agriculture and Rural Development Vol. 5 2004: 156-163

Opportunities for Extension Professionals in International Education

There are numerous opportunities for international colleagues, bound by a common thread, to share in the exchange of information. Numerous organizations support agricultural based projects overseas with a major source of funding originating from the US Agency for International Development (USAID) via the US Farm Bill. These programs rely on the expertise of volunteers from US farms, land-grant universities, cooperatives, private agribusinesses, and nonprofit farm organizations to provide assistance to individual farm enterprises, cooperatives, farmer's associations, agribusinesses, rural credit institutions, universities, and agricultural youth groups overseas. Commodity groups such as the American Soybean Association (ASA) and US Grains Council (USGC) also recruit experts that are involved with technical programs that teach livestock and poultry producers how to use feed grains effectively and manage operations efficiently. The Fulbright Scholar Program administered by the Council for International Exchange of Scholars (CIES) offers opportunities for international educational exchange. The primary mission of extension is to “take the university to the people.” Whether the scope is local, regional, national, or international, the essence of extension supports key projects, which may include the building of partnerships, improvement of business practices, increasing productivity and profitability, and introducing new technologies. In addition, opportunities for scientific exchange contribute to an increased understanding of history, culture, politics, and social structure.

Resurrection of Rural Credit

If the rural credit institutions find themselves in a moribund state today, this is largely attributable to the financial sector reforms introduced in the 1990s, as part of the process of liberalization and globalization of the Indian economy. In the milieu of the new banking culture fostered by reforms, lending to agriculture or priority sectors generally became unfashionable. The relative magnitude of the flow of credit to agriculture shrank and the interest rate regime which was designed to pamper the private corporate sector openly discriminated against agriculture. Even public sector banks (PSBs) merrily defaulted on the credit targets of 18 per cent of net bank credit to agriculture and 40 per cent of net bank credit to priority sectors. The Reserve Bank of India (RBI), which was obsessed with implementing the Basel norms as the main thrust of banking reforms, winked at the defaults. While the priority sector target has been attained during the last couple of years, the target for agriculture continues to remain unattained: lending to agriculture is around 15 per cent today, as compared to the target of 18 per cent of net bank credit. While highly rated corporate entities could raise money from banks or PSBs at interest rates as low as 6 or 7 per cent, the small farmer was required to pay a rate of 12 per cent. It was left to the Government of India to reduce the lending rate to small farmer to 8 per cent only in August 2003. RBI's neglect of agriculture and the rural sector generally was total during the 1990’s: it failed to arrest the deterioration of the health of all institutions involved in rural credit: PSBs, Cooperative credit institutions and Regional Rural Banks (RRBs) - all of these institutions showed high Non-performing Assets (NPAs).

Credit for Rural Poor in Pakistan

Farmers, large and small, and the non-farm population in rural areas all suffer from the liquidity constraint. Credit is needed to acquire command over the use of working capital, fixed capital, and consumption goods. The Green Revolution technologies have increased the credit requirement for modern inputs and farm investment. A new expanded role of rural credit institutions has emerged in the wake of the technology revol~tion in rural areas. Two distinct approaches have been used to provide the financial services to the rural poor. The most widely favoured approach in the past was the use of subsidised interest rates with a portion of credit reserved for the poor. The low interest policy was based on the premise that it would induce farmers, large and small, to use modern' inputs on a larger scale. One of the adverse side-effect of this policy was the introduction of an element of financial unsustainability in the loan portfolios of the credit institutions. The recent view about the delivery of rural credit consists of using market interest rates and using a mixture of 'bottom-up initiatives' at the local level, using non-government groups and 'top-down initiatives' by the formal credit institutions in terms of the simplification of the procedures and decentralisation of the credit operation for credit supply to the rural poor. In this paper, an attempt is made to evaluate the efficacy of these two approaches in the case of Pakistan for delivering credit to the rural poor.