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The Role of Microcredit Program and Micro Enterprises in Poverty Reduction

Author

Listed:
  • Purmiyati, Atik

    (Faculty of Economics and Business Airlangga University B Campus Jl. Airlangga No. 4-6, Surabaya, 60286 INDONESIA.)

  • Setyowati, Retno

    (Faculty of Economics and Business Airlangga University B Campus Jl. Airlangga No. 4-6, Surabaya, 60286 INDONESIA.)

  • Rakhima, Marta Sabila

    (Faculty of Economics and Business Airlangga University B Campus Jl. Airlangga No. 4-6, Surabaya, 60286 INDONESIA.)

Abstract

This study analyzes the technical efficiency micro-enterprises in agricultural sector and its determinants. It further investigate the effect of the microcredit program of Kredit Perniagaan Rakyat (KUR) on the efficiency of micro-enterprises in East Java Indonesia hence the poverty reduction. In achieving the aforementioned objectives, three methods are employed namely Data Envelopment Analysis (DEA), Tobit Regression, and Logistic Regression. The estimation results of the Micro Enterprises efficiency using DEA shows that under the assumption of Variable Return to Scale 62 percent of the samples have reached full efficiency. However, under the assumption of Constant Return to Scale, 28 percent of the samples have reached full efficiency.. The factors that influence the efficiency based on tobit regression analysis are profit, asset, credit amount, KUR access, realization tempo, age, labor, and business location. Furthermore, factors affecting poverty status based on logistic regression analysis are income, gender, KUR access, and number of household .

Suggested Citation

  • Purmiyati, Atik & Setyowati, Retno & Rakhima, Marta Sabila, 2021. "The Role of Microcredit Program and Micro Enterprises in Poverty Reduction," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 55(2), pages 29-38.
    • Handle: RePEc:ukm:jlekon:v:55:y:2021:i:2:p:29-38
    DOI: http://dx.doi.org/10.17576/JEM-2021-5502-3
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    References listed on IDEAS

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    6. Tadie Mirie Abate & Abebe Birara Dessie & Taye Melese Mekie, 2019. "Technical efficiency of smallholder farmers in red pepper production in North Gondar zone Amhara regional state, Ethiopia," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-18, December.
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    More about this item

    Keywords

    Microcredit; agriculture; efficiency; micro-enterprises; poverty;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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