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The Effect Of Saving Account Ownership And Access To Financial Institutions On Household Loans In Indonesia

Author

Listed:
  • Robby Maulana

    (Provincial Government of West Kalimantan)

  • Chaikal Nuryakin

    (University of Indonesia)

Abstract

This study investigates whether saving account ownership and access to financial institutions influence household credit in Indonesia. Using a multinomial logit regression model and a sample of 294,426 households from the 2018 national socioeconomic survey and the village potential data, we find that account ownership is essential in encouraging formal credit and reducing informal credit. Access to commercial banks, rural banks, and cooperatives can then improve formal credit without significantly reducing informal credit. Hence, the government needs to encourage bank account ownership and facilitate access to financial institutions in order to promote formal credit and reduce informal credit.

Suggested Citation

  • Robby Maulana & Chaikal Nuryakin, 2021. "The Effect Of Saving Account Ownership And Access To Financial Institutions On Household Loans In Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(3), pages 465-486, September.
    • Handle: RePEc:idn:journl:v:24:y:2021:i:3g:p:465-486
    DOI: https://doi.org/10.21098/bemp.v24i3.1428
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    More about this item

    Keywords

    Account ownership; Credit access; Financial inclusion; Financial institutions;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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