WHY MICRO AND SMALL FAMILY ENTERPRISES DO NOT BORROW FROM MICROCREDIT INSTITUTIONS? A CASE STUDY IN EAST JAVA, INDONESIA

Augendra Bhukuth, Bernard Terrany and Ani Wulandari
Additional contact information
Bernard Terrany: Ipag Business School, Paris, France
Ani Wulandari: Narotama University, Surabaya, Indonesia

Studies in Business and Economics, 2019, vol. 14, issue 3, 18-32

Abstract: It is assumed that MSMEs growth is limited due to lack of access to the financial markets, therefore MFIs play a role to refine such market imperfection. This paper aims to examine this assumption. A qualitative approach is used to obtain information from MSMEs and MFIs. Eight enterprises and three MFIs; two of them are cooperatives and one government microfinance agency are studied. There is a high demand for credit whereas not all the demand is satisfied mainly those family businesses involved in the informal sector. The main findings exhibit that even when MFIs credit is at disposal, formal and informal MSMEs prefer to draw a loan from Informal Financial Institutions (IFIs) because the market is more flexible than the MFIs which embrace the same strategies as commercial banks.

Keywords: Loan; Informal Finance Institutions (IFI); Formal Financial Institutions; Family Businesses; Micro-Small Enterprises; Indonesia (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
http://eccsf.ulbsibiu.ro/RePEc/blg/journl/14302bhukuth.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:blg:journl:v:14:y:2019:i:3:p:18-32

Access Statistics for this article

More articles in Studies in Business and Economics from Lucian Blaga University of Sibiu, Faculty of Economic Sciences Lucian Blaga University of Sibiu, Faculty of Economic Sciences Dumbravii Avenue, No 17, postal code 550324, Sibiu, Romania. Contact information at EDIRC.
Bibliographic data for series maintained by Mihaela Herciu ().