TOWARD HIGHER FINANCIAL INCLUSION RATE: SERVICE QUALITY, COSTS OF ACCESS, AND AWARENESS

Chaikal Nuryakin, Prani Sastiono (), Faradina Maizar, Pyan Amin (), Nanda Puspita (), Wahyu Pramono () and Christine Tjen ()
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Prani Sastiono: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia
Pyan Amin: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia
Nanda Puspita: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia
Wahyu Pramono: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia
Christine Tjen: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia

No 201821, LPEM FEBUI Working Papers from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: The inclusion level of DFS and Laku Pandai (inclusion of access or use of services) have reached 28% and 43%. Nevertheless, when we define the inclusion by account ownership (inclusion of banking account), the inclusion rates drop to 5% and 25%. The lack of awareness of DFS and Laku Pandai is still considered as the major obstacle to broaden the access of financial services through agents. Laku Pandai appears more reliable in improving financial service access for the poor and people in remote areas as it may provide a more efficient access (in term of cost, distance, and time of transport) and perceived by users to provide better service quality than other formal financial services they have experienced thus far. On the other hand, DFS services seems to be more attractive toward more educated and higher income segment of society. Nevertheless, the cost of access of DFS is not much different from the cost of access of banks and other formal financial services while the quality is perceived to be less by its users. Furthermore, the efficiency of both DFS and Laku Pandai could be much improved since there is a significant overcharging in their service fees. On the account ownership, there is an indication that DFS is not a preferable financial access for people who are excluded from formal financial services while it is for Laku Pandai. The regression results also show that users of both DFS and Laku Pandai need time to open or to register an account, possibly due to time needed to build in trust in the agents. Another factor that is important in determining whether user is to open an account is the (perceived) cost. Therefore, the aforementioned service fee overcharging should be taken seriously to improve rate of opening or registering account.

Keywords: LKD; —; Laku; Pandai; —; Digital; Inclusion (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2018-07, Revised 2018-07
New Economics Papers: this item is included in nep-fle and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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