IDEAS home Printed from https://ideas.repec.org/a/rbs/ijfbss/v9y2020i2p01-12.html
   My bibliography  Save this article

MSMEs as mediation in the effects of investment credit, interest rates, and labor on economic growth: Evidence from Indonesia

Author

Listed:
  • Muliadi Muliadi

    (Department of Economics, Faculty of Economics and Business, Mulawarman University, Samarinda City, Indonesia)

  • Dio Caisar Darma

    (Department of Management, Sekolah Tinggi Ilmu Ekonomi Samarinda, Samarinda City, Indonesia)

  • Jati Kasuma

    (Faculty of Business and Management, University Teknologi MARA (Sarawak),SamarahanCity,Malaysia)

Abstract

An increase in MSMEs in large numbers is very instrumental in increasing economic growth in developing countries, including Indonesia. The research objective is based on identifying the effect of investment credit, interest rates, and labor on economic growth through the role of MSMEs.The design of this research is descriptive-verification to present a structured, factual and accurate picture and test hypotheses empirically through the MRA model.Empirical analysis proves that investment creditand interest rates through the role of MSMEs can influence positively and significantly on Indonesia's economic growth. In other results, it appears that the role of MSMEs is less able to mediate the effect of labor on Indonesia's economic growth. This fact is based on a negative and insignificant relationship.In a sentence or two, enter the implications and limitations of your research. In Indonesia, increasing bank lending to MSMEs in practice is undermined by lending policies by banks and by macroeconomic factors (economic growth, interest rates, investment credit, and labor).From this study, the fulfillment of investment credit, interest rates, and labor needed in the Indonesian economy through MSMEs come from the availability of funds to finance investments that can be collected from various sources of lending and business capital from banks and non-bank institutions.

Suggested Citation

  • Muliadi Muliadi & Dio Caisar Darma & Jati Kasuma, 2020. "MSMEs as mediation in the effects of investment credit, interest rates, and labor on economic growth: Evidence from Indonesia," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(2), pages 01-12, April.
    • Handle: RePEc:rbs:ijfbss:v:9:y:2020:i:2:p:01-12
    as

    Download full text from publisher

    File URL: https://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/702/548
    Download Restriction: no
    File URL: https://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/702
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. World Bank, 2012. "The World Bank Annual Report 2012," World Bank Publications - Books, The World Bank Group, number 11845.
    2. Sajijul Islam & Debdas Ganguly, 2019. "Mediating effect of utilisation in the relation between loan services from PSBs and capital formation of MSMEs: a study of Purba and Paschim Medinipur districts of West Bengal," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-16, December.
    3. Salvatore Zecchini & Marco Ventura, 2009. "The impact of public guarantees on credit to SMEs," Small Business Economics, Springer, vol. 32(2), pages 191-206, February.
    4. Jianmu Ye & KMMCB Kulathunga, 2019. "How Does Financial Literacy Promote Sustainability in SMEs? A Developing Country Perspective," Sustainability, MDPI, vol. 11(10), pages 1-21, May.
    5. Frederic S. Mishkin, 2009. "Globalization, Macroeconomic Performance, and Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(s1), pages 187-196, February.
    6. Ndeye Ndiaye & Lutfi Abdul Razak & Ruslan Nagayev & Adam Ng, 2018. "Demystifying small and medium enterprises’ (SMEs) performance in emerging and developing economies," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 18(4), pages 269-281, December.
    7. Hayashi, Mitsuhiro, 2002. "The role of subcontracting in SME development in Indonesia:: Micro-level evidence from the metalworking and machinery industry," Journal of Asian Economics, Elsevier, vol. 13(1), pages 1-26.
    8. World Bank, 2012. "The World Bank Annual Report 2012," World Bank Publications - Books, The World Bank Group, number 11846.
    9. Frederic S. Mishkin, 2009. "Globalization, Macroeconomic Performance, and Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(s1), pages 187-196, February.
    10. World Bank, 2012. "The World Bank Annual Report 2012," World Bank Publications - Books, The World Bank Group, number 11844.
    11. González-Loureiro, Miguel & Pita-Castelo, Jose, 2012. "A model for assessing the contribution of innovative SMEs to economic growth: The intangible approach," Economics Letters, Elsevier, vol. 116(3), pages 312-315.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Diana Lestari & Made Setini & Dio Caisar Darma & Siti Amalia, 2020. "International trade in the Covid-19 outbreak: Is the digital economy working?," International Journal of Business and Management, International Institute of Social and Economic Sciences, vol. 8(2), pages 86-92, November.
    2. Adi Wijaya & Muhammad Awaluddin & A. Erwin Kurniawan, 2022. "The Essence of Fuel and Energy Consumptions to Stimulate MSMEs Industries and Exports: An Empirical Story for Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 12(2), pages 386-393, March.
    3. Rasimikayati, Elly & Karyani, Tuti & Rachmat Saefudin, Bobby, 2023. "Characteristics of Vegetables and Fruit Firms and their Relationship with Business Risk," International Journal of Agriculture and Environmental Research, Malwa International Journals Publication, vol. 9(4), August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guido de Blasio & Stefania De Mitri & Alessio D'Ignazio & Paolo Finaldi Russo & Lavina Stoppani, 2017. "Public guarantees on loans to SMEs: an RDD evaluation," Temi di discussione (Economic working papers) 1111, Bank of Italy, Economic Research and International Relations Area.
    2. Mukherjee, Swayambhu & Kar, Saibal, 2020. "Leveraging Non-Farm Income: Micro-evidence of Occupational Choice for Rural Households in India," MPRA Paper 109940, University Library of Munich, Germany.
    3. Legovini, Arianna & Di Maro, Vincenzo & Piza, Caio, 2015. "Impact evaluation helps deliver development projects," Policy Research Working Paper Series 7157, The World Bank.
    4. Ochia, Stevenson Enemuwa (Doctorial Student) & Bobmanuel, Karibi Benson PhD & Umunnah, Blessing Onyinyechukwu PhD, 2022. "Port Harcourt Residents’ Perception of Energyplatform Programme on Nigeria Info 92.3FM," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(12), pages 794-802, December.
    5. Xhoxhi, Orjon & Pedersen, Søren Marcus & Lind, Kim Martin & Yazar, Attila, 2014. "The Determinants of Intermediaries’ Power over Farmers’ Margin-Related Activities: Evidence from Adana, Turkey," World Development, Elsevier, vol. 64(C), pages 815-827.
    6. Rachel Wolfgramm & Sian Flynn-Coleman & Denise Conroy, 2015. "Dynamic Interactions of Agency in Leadership (DIAL): An Integrative Framework for Analysing Agency in Sustainability Leadership," Journal of Business Ethics, Springer, vol. 126(4), pages 649-662, February.
    7. Kent Matthews, 2014. "Cost Inefficiency in the Pakistan Banking Sector 2002-2009," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 10, pages 1-20.
    8. Samuel Egyakwa Ankomah & Adam Fusheini & Christy Ballard & Emmanuel Kumah & Gagan Gurung & Sarah Derrett, 2021. "Patient–public engagement interventions for health system improvement in Sub‐Saharan Africa: A systematic scoping review protocol," International Journal of Health Planning and Management, Wiley Blackwell, vol. 36(2), pages 273-281, March.
    9. Josef Brechler & Vaclav Hausenblas & Zlatuse Komarkova & Miroslav Plasil, 2014. "Similarity and Clustering of Banks: Application to the Credit Exposures of the Czech Banking Sector," Research and Policy Notes 2014/04, Czech National Bank.
    10. Stephen P. D’Alessandro & Jorge Caballero & John Lichte & Simon Simpkin, 2015. "Kenya," World Bank Publications - Reports 23350, The World Bank Group.
    11. Ayaz Hussain & Umar Draz & Tariq Ali & Saman Tariq & Muhammad Irfan & Adam Glowacz & Jose Alfonso Antonino Daviu & Sana Yasin & Saifur Rahman, 2020. "Waste Management and Prediction of Air Pollutants Using IoT and Machine Learning Approach," Energies, MDPI, vol. 13(15), pages 1-22, August.
    12. Da Mata, Daniel & Resende, Guilherme, 2020. "Changing the climate for banking: The economic effects of credit in a climate-vulnerable area," Journal of Development Economics, Elsevier, vol. 146(C).
    13. Rahab Wanjiru Waihenya & Prof. Peter Kithae, 2022. "Mobile Banking Services and Performance of Informal Businesses in Nairobi, Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(10), pages 50-58, October.
    14. Andries, Kathleen & Gallemore, John & Jacob, Martin, 2017. "The effect of corporate taxation on bank transparency: Evidence from loan loss provisions," Journal of Accounting and Economics, Elsevier, vol. 63(2), pages 307-328.
    15. Gutierrez, Eva & Choi, Tony, 2014. "Mobile money services development : the cases of the Republic of Korea and Uganda," Policy Research Working Paper Series 6786, The World Bank.
    16. Bernhard Reinsberg, 2017. "Organizational reform and the rise of trust funds: Lessons from the World Bank," The Review of International Organizations, Springer, vol. 12(2), pages 199-226, June.
    17. Sanderson, Abel & Thomas, Lusiyano & Tafirenyika, Mafugu, 2021. "Factors affecting gold production in Zimbabwe (1980–2018)," Resources Policy, Elsevier, vol. 73(C).
    18. Steven J. Klees & Nelly P. Stromquist & Joel Samoff & Salim Vally, 2019. "The 2018 World Development Report on Education: A Critical Analysis," Development and Change, International Institute of Social Studies, vol. 50(2), pages 603-620, March.
    19. Thilakaweera, Bolanda Hewa & Harvie, Charles & Arjomandi, Amir, 2016. "Branch expansion and banking efficiency in Sri Lanka’s post‐conflict era," Journal of Asian Economics, Elsevier, vol. 47(C), pages 45-57.
    20. Kabwe Harnadih Mubanga & Willem Ferguson, 2017. "Threats to food sufficiency among smallholder farmers in Choma, Zambia," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 9(4), pages 745-758, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbs:ijfbss:v:9:y:2020:i:2:p:01-12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hasan Dincer (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.