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The Role of Family Networks and Gender on Borrowing Behavior in Indonesia

Author

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  • Meliyanni Johar
  • Anu Rammohan

    (University of Technology - Sydney, Australia
    University of Western Australia, Australia)

Abstract

In this paper, we use the nationally representative Indonesian Family Life Survey dataset (IFLS-3), to examine if access to loans from informal networks such as family and friends influences borrowing behavior in formal credit markets. Our empirical results show that there is a gender dimension to borrowing behavior, with females being more likely to receive loans from family members. However, access to loans from family does not lower their propensity to seek out formal credit. For males, access to family loans does not affect borrowing propensity but it increases the size of borrowing from the formal sector. From a policy perspective, our results indicate that education plays an important role in improving an individual's access to financial credit markets and reducing their dependence on internal networks.

Suggested Citation

  • Meliyanni Johar & Anu Rammohan, 2011. "The Role of Family Networks and Gender on Borrowing Behavior in Indonesia," Journal of Developing Areas, Tennessee State University, College of Business, vol. 45(1), pages 111-134, July-Dece.
    • Handle: RePEc:jda:journl:vol.45:year:2011:issue1:pp:111-134
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    More about this item

    Keywords

    Stochastic Frontier Analysis; Data Envelopment Analysis; Technical Efficiency; Determinants of Inefficiency; Farm Households;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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