Main Article Content


Microfinance Institutions (MFIs) can help reduce poverty by offering small loans to people who cannot get bank loans due to lack of collateral. However, in Indonesia, access to microfinance institutions is unequally distributed, as shown by the establishment of MFIs in Indonesia, which covers only 22 out of 34 provinces. This condition limits their impact on poverty reduction. This study examines how access to MFIs and the loans they provide affect poverty rates in Indonesia, using cross-sectional data from 22 provinces between 2016 and 2022. The results show that access to MFIs and the loans they provide do not significantly reduce poverty. This is due to poor infrastructure, low-quality MFI services, and insufficient loan amounts. The study also found that education lowers poverty, unemployment increases it, and agriculture helps reduce it. To improve poverty reduction, the government should improve infrastructure and extend MFI coverage to more provinces. Additionally, MFIs should increase their loan amounts to make a bigger impact.


access loan microfinance poverty panel data

Article Details

How to Cite
Laksmi , N. K., & Soseco, T. (2024). Do Multifinance Institutions Matter for Poverty Reduction? Evidence from Indonesia. Jurnal Ekonomi Pembangunan, 22(1), 29–40.


  1. Adnan, G., & Amri, K. (2021). Do Gender Empowerment and Democracy Reduce Poverty Rate? A Cross-Provinces Evidence from Western Indonesia. Economics & Sociology, 14(3), 54-71.
  2. Andriansyah, R., & Yulmardi, C. M. (2024). The Influence of Average Length of Schooling, Life Expectancy and Per Capita Expenditure on Poverty Levels Through Economic Growth in Tanjung Jabung West District. International Research Journal of Economics and Management Studies IRJEMS, 3(3), 317-330.
  3. Arif, M., Ismail, M., & Santoso, D. B. (2019). Does Microfinance Affect Poverty Reduction and Inequality in Indonesia? International Journal of Scientific and Technology Research, 8(4), 122-125.
  4. Badan Perencanaan Pembangunan Nasional (2020). Lampiran Peraturan Presiden Republik Indonesia Nomor 18 Tahun 2020 tentang Rencana Pembangunan Jangka Menengah Nasional 2020-2024. Pemerintah Republik Indonesia.
  5. Badan Pusat Statistik. (2022). Penghitungan dan Analisis Kemiskinan Makro Indonesia Tahun 2022.
  6. Banerjee, S. B., & Jackson, L. (2017). Microfinance and the Business of Poverty Reduction: Critical Perspectives from Rural Bangladesh. Human relations, 70(1), 63-91.
  7. Basu, P., & Srivastava, P. (2005). Scaling-Up Microfinance for India's Rural Poor. World Bank Policy research working paper, (3646).
  8. Batinge, B. K., & Jenkins, H. (2021). Gender and Poverty Reduction in Ghana: The Role of Microfinance Institutions. International Journal of Economics and Finance, 13(8), 1-71.
  9. Bel hadj Miled, K., & Ben Rejeb, J. E. (2018). Can Microfinance Help to Reduce Poverty? A Review of Evidence for Developing Countries. Journal of the Knowledge Economy, 9, 613-635.
  10. Chen, R., & DesJardins, S. L. (2008). Exploring the Effects of Financial Aid on The Gap in Student Dropout Risks by Income Level. Research in Higher education, 49, 1-18.
  11. Chikwira, C., Vengesai, E., & Mandude, P. (2022). The Impact of Microfinance Institutions on Poverty Alleviation. Journal of Risk and Financial Management, 15(9), 393.
  12. Effendy, R. S. (2017). Peranan Pendidikan dan Produktivitas Sektor Pertanian terhadap Penurunan Tingkat Kemiskinan di Jawa Tengah. Media Ekonomi Dan Manajemen, 32(2), 108-118.
  13. El-Nasharty, H. (2022). The Role of Microfinance in Poverty Reduction: Countries Experiences by Regions 2000-2018. Innovation Journal of Social Sciences and Economic Review, 4(1), 1-9.
  14. Félix, E. G. S., & Belo, T. F. (2019). The Impact of Microcredit on Poverty Reduction in Eleven Developing Countries in South-East Asia. Journal of Multinational Financial Management, 52, 100590.
  15. Fietz, K., & Lay, J. (2023). Digitalization and Labour Markets in Developing Countries. GIGA Working Papers. 335. GIGA German Institute of Global and Area Studies.
  16. Gibbons, D. S., & Meehan, J. W. (1999). The Microcredit Summit's Challenge: Working toward Institutional Financial Self-Sufficiency while Maintaining A Commitment to Serving the Poorest Families. Journal of Microfinance/ESR Review, 1(1), 132-192.
  17. Gudjonsson, S., Kristinsson, K., Gylfason, H. F., & Minelgaite, I. (2020). Female Advantage? Management and Financial Performance in Microfinance. Business: Theory and Practice, 21(1), 83-91.
  18. Gujarati, D. N., & Porter, D. C. (2009). Basic Econometrics. McGraw-hill.
  19. Ibrahim, R. A., & Sampath, S. (2022). Analysis of Average Length of Schooling of Indonesian Citizens in the Future Using Markov Chains. International Journal of Ethno-Sciences and Education Research, 2(4), 152-160.
  20. Khan, A. A., Khan, S. U., Fahad, S., Ali, M. A., Khan, A., & Luo, J. (2021). Microfinance and Poverty Reduction: New Evidence from Pakistan. International Journal of Finance & Economics, 26(3), 4723-4733.
  21. Lacalle‐Calderon, M., Perez‐Trujillo, M., & Neira, I. (2018). Does Microfinance Reduce Poverty Among the Poorest? A Macro Quantile Regression Approach. The Developing Economies, 56(1), 51-65.
  22. Menteri Koordinator Bidang Perekonomian Republik Indonesia. {2021). Peraturan Menteri Koordinator Bidang Perekonomian Republik Indonesia Nomor 4 Tahun 2021 tentang Pelaksanaan Strategi Nasional Keuangan Inklusif. Pemerintah Indonesia
  23. Mkwambisi, D. D., Fraser, E. D., & Dougill, A. J. (2011). Urban Agriculture and Poverty Reduction: Evaluating How Food Production in Cities Contributes to Food Security, Employment and Income in Malawi. Journal of International Development, 23(2), 181-203.
  24. Montalbano, P., & Nenci, S. (2022). Does Global Value Chain Participation and Positioning in The Agriculture and Food Sectors Affect Economic Performance? A Global Assessment. Food Policy, 108, 102235.
  25. Nabil, M., & Herianingrum, S. (2022). Financial Inclusion of Sharia Banking and Poverty 33 Province in Indonesia. Jurnal Ilmiah Ekonomi Islam, 8(2), 1549-1554.
  26. Obayagbona, J. (2018). Microfinance Bank and Poverty Alleviation in Nigeria: An Impact Assessment. Amity Journal of Finance, 3(2), 1-12.
  27. Onuka, O. I. (2021). Microcredit and Poverty Alleviation in Nigeria in COVID-19 Pandemic. Asia-Pacific Journal of Rural Development, 31(1), 7-36.
  28. Otoritas Jasa Keuangan. (2022a). Buku Statistik Pembiayaan Mikro 2021.
  29. Otoritas Jasa Keuangan. (2022b). Statistik Perbankan Indonesia - Desember 2022.
  30. Santoso, D. B., Gan, C., Revindo, M. D., & Massie, N. W. G. (2020). The Impact of Microfinance on Indonesian Rural Households' Welfare. Agricultural Finance Review, 80(4), 491-506.
  31. Saputra, S. A., & Widodo, W. (2023). The Impact of Poverty, Economic Inequality, and Unemployment on Crime Rates in Central Java Province from 2000 to 2021. Journal of Economic Education, 12(1), 113-124.
  32. Soseco, T., Hidayah, I., & Dwidyah Rini, A. (2022). Gender Determinant on Multidimensional Poverty Index: Evidence from Indonesia. Jurnal Ilmu Sosial dan Ilmu Politik, 26(2), 137-151.
  33. Soseco, T., Olivia, S., & Oxley, L. (2023). Interprovincial Wealth Inequality by Factor Components in Indonesia. Bulletin of Indonesian Economic Studies 1–35.
  34. Todaro, M. P., & Smith, S. C. (2020). Economic Development. Pearson UK.
  35. Triatmanto, B., & Bawono, S. (2023). The Interplay of Corruption, Human Capital, and Unemployment in Indonesia: Implications for Economic Development. Journal of Economic Criminology, 2, 100031.
  36. Winters, P., De Janvry, A., Sadoulet, E., & Stamoulis, K. (1998). The Role of Agriculture in Economic Development: Visible and Invisible Surplus Transfers. The Journal of Development Studies, 34(5), 71-97.
  37. Yasin, M. Z. (2020). The Role of Microfinance in Poverty Alleviations: Case Study Indonesia. Airlangga International Journal of Islamic Economics and Finance, 3(2), 76-88.
  38. Zhou, D., Cai, K., & Zhong, S. (2021). A Statistical Measurement of Poverty Reduction Effectiveness: Using China as An Example. Social Indicators Research, 153, 39-64.

Similar Articles

1 2 > >> 

You may also start an advanced similarity search for this article.