1. Introduction
Economic activity in the countryside in general is dominated by
small-scale farms with the main actors of farmers, farm workers, traders and
agricultural inputs, agro-processing, and home industries. The businesses are
generally still faced with the problem of limited availability of capital,
capital constraints may limit the space for agricultural activities in the
rural sector (Hamid, 1986).
Although the government has implemented a variety of loan programs, but
the performance results are deemed still not in line with expectations. This is
reflected in the performance of financial institutions has not been
satisfactory.
According Martowijoyo (2005) the weak performance of financial institutions
as financial intermidiasi institutions can be viewed from three aspects: (1)
low levels of loan repayment; (2) low morality of the implementing agency, and
(3) low level of mobilization of public funds. The disadvantage of these has
consequences for not continuing financial institutions set up after the program
is completed.
To answer the problem of limited capital and banking institutions are
difficult to access for small farmers, it is necessary to further optimize the
potential of financial institutions which can be an alternative source of
funding for farmers and rural communities. One of the financial institutions
that can be exploited and encouraged to finance micro segment is rural banks
(BPR). One of the BPR that are in the river Rumbai Dhramsraya District of West
Sumatra Province.
The existence of Rivers Tassel rural BPR could play a role serving the
needs of small farms, is the result of the institution-based social capital.
Fukuyama (2002) argues that social capital, focused on the importance of the
relationship (relationship), honor one another (mutually respectful) and the
relationship of trust (trusting relationship) between citizens. Furthermore,
Putnam (1993), has also shown evidence that economic growth is positively
correlated with the presence of social capital.
Other institutions have been successful in utilizing local institutional
as financial intermediaries with rural communities is a non-bank credit
institutions such as LPD and Lumbung Bali Pitih Nagari (LPN) in West Sumatra.
2. Research problem
Under
conditions of dualism financial institutions that serve the needs of Small Farm
(Usaha Tani Kecil - UTK) in rural financial markets, there are several models
of financial institutions in rural areas (Ross Mc.Leod in Kuncoro, 1987). Model
Formal Financial Institutions (LKF) is very difficult to access because of
characteristics that are procedural and apply the requirements are difficult to
fulfill by farm employers (Mubyarto, 1990; Kartasasmita, 1986; Braverman,
1993). Based on the above phenomenon can be formulated research problem as
follows:
1) Whay rural banks (BPR) Sungai
Rumbai can survive in the long term and play an effective role in serving the
needs of capital UTK in Rumbai River area?
2) How BPR Sungai Rumbai applying
social capital in enhancing the role of institutions to serve the needs of
capital UTK?
3. Research objectives and
benefits
The
purpose of this study was engidentifikasi factors that affect BPR Sungai Rumbai
can survive long-term presence and play an effective role in serving the needs
of capital UTK in the countryside as well as explaining how BPR Sungai Rumbai
can take advantage of Social Capital element in improving the service to the
UTK. While the benefits of this research are expected to contribute new knowledge
that an element of prudence / formal requirements (5-C), which is applied to
the formal financial institutions in order to protect the interests of
investors and maintaining the sustainability of financial institutions, it
turns out to be ineffective or become an obstacle good to microfinance and
farming in the development of other usahanya.Disisi results of this study can be used as
a reference for parties concerned by financial institutions so that the
treatment / rules that apply in formal financial institutions are likely to
embrace the capitalist system can not be equated with the treatment / rules in
microfinance institutions that tend to be based on social capital.
4. Review of Literature
1) The concept of Financial
Institutions
Microfinance
Institutions MFIs) is a program of crediting for small amounts to the poorest
to finance the project he's working on his own in order to generate income,
allowing them to care for themselves and their families, "Programmes
extend small loans to very poor for cell- employment projects that generate
income, alowing them to care for Themselves and their family ". Microfinance
Institutions (MFIs) in Indonesia according to the Asian Development Bank and
the World Bank (Gunawan, 2007) The main characteristic, namely; (1) provides a
variety of financial services that are relevant or appropriate to the real
needs of the community, (2) serve low-income communities and (3) using the
procedures and mechanisms are contextual and flexible to make it more easily
accessible to poor people need.
Developing
micro enterprises is a strategic move because it would realize the broad bases
development or development through equity. They need capital to develop its
capacity. With business increases (becomes small scale enterprises), will
effectively address the poverty suffered by themselves and expected to help
people in the poor category.
2) Definition of Social
Capital
Fukuyama (1995) illustrates the social capital in the trust, believe and
vertrauen means that the importance of trust is rooted in cultural factors,
such as ethics and morals. Trust appears the community to share a set of moral
values, as a way to create a common hope and honesty. He also stated that the
associations and the local network really has a positive impact on economic
welfare and local development and plays an important role in environmental
management. James S, Coleman (1999) asserts that, social capital as a tool for
understanding social action that combines theoretical perspectives of sociology
and economics. This notion was reinforced by Serageldin (1999) that social
capital always involves the community and make the community arises not only
from the interaction of market and economic value. Serageldin provides a
classification of social capital among others:
Social capital in the form of
social interaction but durable unidirectional relationship, such as teaching and
social interaction trading relationship was reciprocal (mutual) such as social
networks and associations.
Social capital in the form of
social interaction effects are more durable in such unidirectional relationship
of trust, respect and imitation are in the form of a reciprocal relationship
like gossip, reputation, pooling, social roles and coordination, all of these
contain high economic value.
Simple and
general conclusion that can be raised about the main elements of social capital
include norms, reciprocity, trust, and network, Fukuyama (1995). The fourth
element is a significant influence on the behavior of co-operation to achieve
the desired result, which could accommodate the interests of individuals and
groups who cooperate collectively. Referring to Fukuyama (1995), there are
three parameters ie social capital:
a. Trust. As explained Fukuyama (1995), trust is a
growing expectation in a society demonstrated their honest behavior, organized
and co-operation based on the norms that are shared. Social trust is an
application to this understanding. Damage social capital will lead to anti
-social behavior (Cox, 1995), the absence of social capital in financial
institutions will lead to customer relationship with the manager of the
institution will not trust each other.
b. Norma. The
norms consist of understandings, values, expectations and goals which are
believed and run together of religious, moral guidelines, and standards seem
secular ethical code propfesional. The norms are built and thrive based on the
history of cooperation in the past and applied to support the climate of
cooperation (Putnam, 1993, Fukuyama 1995). The norms can be a precondition nor
a product of social trust.
5. Results
From the
analysis, it was found that the case of financial institutions, PT.BPR Sungai
Rumbai have been able to serve customers in the agriculture, plantation, and
trade, although with the procedures and requirements are relatively
complicated, but it turns out the BPR Sungai Rumbai lending is dominated by the
agricultural sector.
In terloihat empirical findings that, of the 20 samples with the customer maximum
ceiling of credit for small farms of 50 million pernasabah, 68 percent of them
to UTK, while the remaining 32 percent for trade and others. From this data
illustrated that, PT BPR Sungai Rumbai has been able to run financial services
in accordance with the expectations of society in meeting the capital needs of
the business. The opinion has been saying that the farming community has a
tendency repayment rates are relatively low. It turned out contradicted by the
fact that the level of non-performing loans (NPL) is only 2 percent of the
total loans disbursed (GMS report 2014) . This means that the returns that
farmers loans in the location of research is quite high and, according to Bank
Indonesia provisions of this institution is very healthy (NPL <5%). These
findings also refute the suggestion that the rate of repayment of the
agricultural sector is relatively low, but this has not been proven in BPR
Sungai Rumbai.
Obstructions
to UTK accessing credit in general is the application procedure, administrative
requirements, and the most important is the requirement of collateral, but at
BPR Sungai Rumbai obstacles / difficulties regarding aggunan not be found for
each head of a family who came from a family of transmigration has been
equipped with three (3 ) certificate of land ownership rights with a total area
of 2 ha. Therefore, 98% of the guarantees contained in BPR Sungai Rumbai in the
form of land titles.
The
portion of lending to the agricultural sector (68%), trade (32%), while the
household (0%), education (0%), and for buyers of vehicles (0%). The portion of
lending to the agricultural sector (68%), trade (32%), while the household
(0%), education (0%), and for buyers of vehicles (0%). From this information it
can be concluded that the BPR Sungai Rumbai has been instrumental in helping
the capital UTK. This can be seen more than 68 per cent of the total loans
disbursed to the sector UTK.
5.1 The
philosophy of establishment of the institute
In
general terms the establishment of both the RB cases are community initiatives in
order to want to step up efforts to provide better meet the needs of credit and
an increase in revenue. This is evident from the establishment of institutions
and service system.
Establishment
BPR Sungai Rumbai begins with a financial institution whose activities are
limited to serving members were only about 40 people with the entrance fee of
Rp 25,000, - and its establishment in accordance with the permission of the
Regent of Sawahlunto-Sijunjung letter No. 10 dated August 8, 1988, then in
accordance with its development LPN Sungai Rumbai changed its status BPR-LPN
Sungai Rumbai.
At
first both in the establishment and management and pengawasanya always involve
members. But after changing the status to the RB no longer involves the
participation of members / customers, communities around the villages and
village officials in decision-making, but only in GMS can provide a voice for
evaluation and monitoring.
After LPN Sungai Rumbai changed her status to
PT.BPR (co limited) operating system has automatically follow the rules of Bank
Indonesia. The objective of BPR to serve capital of rural communities has been
able to touch UTK, though difficult and complex service system by requiring the
surrender of collateral. Although the terms of the procedures and rules
difficult and complicated PT BPR Sungai Rumbai still show progress. This is
reflected by the growth of the asset value and the small percentage of non
performancr loans (2%) at the end of 2014.
Conditions
BPR Sungai Rumbai is still strong due to the proximity between managers with
community members, the service system of credit is based on a sense of
togetherness among tribal / ethnic Javanese in daily communication is using
Java language, so it creates a sense of kinship between them, although since its
status was changed to PT. BPR, changing service system like conventional bank
services, procedures and requirements are generally complicated and collateral
requirements that must be met by UTK, but in this case Sungai Rumbai River
(collateral) is not a barrier because it can be met by the customer.
a)
Accessibility.
PT.BPR Sungai Rumbai bank is a financial institution in the form
of secondary, thereby applying the conventional banking system like a
commercial bank. Characteristics that really stood out was the procedure and
terms of credit to each potential customer.
BPR
Sungai Rumbai, requirements of credit applications, among others: (1) have a
decent efforts, (2) completing the form, (3) a letter from the trustee
villages, copy of ID, passport photo, (4) to provide collateral in the form of
certificates of land / building, reg car / motorcycle, deposit or paychecks,
and (5) pay the cost of provision or administration of 1 percent of the loan.
From the aspect
of the location, a strategic location, PT.BPR Sungai Rumbai is located close to
the market and on the edge of Padang-Sumatra – Jakarta highway.
The process of
loan application until the loan is approved and disbursed takes varies. In
PT.BPR Sungai Rumbai 1-7 days for the applicant / new customers and only 1-2
days for existing customers, length of the time range due to the presence of
several stages in the process of loan application as examination of the
validity of administration, survey feasibility and credit committee hearing.
The procedure is difficult and complicated in the BPR has no impact on the low
number of small farmers who obtain loans. It is seen that 68 per cent of the
total loans disbursed at UTK channeled to meet all the procedures and
administrative requirements and the availability of collateral.
Loan repayment
system in PT.BPR Sungai Rumbai return based on monthly installments and bears
interest expense respectively 17% and 18% per year. To support the smooth
repayment of the loan to the RBs, in accordance with Bank Indonesia, rural
setting rules and sanctions are as shown in table following:
Table 1: Conditions Arrears, Category and Sanctions
Source: PT BPR Rumbai River
Based
on the foregoing, the position of credit loans given to customers farmer has a
condition that is quite varied as shown in Table 2.
Table 2: Credit Position By Category and Number Debtor BPR Years 2014
In
PT.BPR Sungai Rumbai categorized 98 percent of loan recipients smoothly, 0.00
percent is classified as substandard, doubtful 0.00 percent, and only 2 percent
are categorized jammed. Their simple administrative procedures, collateral
requirements are not absolute, rapid loan disbursement time, location
relatively close, and the interest is not very high (17-18%). The accessibility
of PT. BPR Sungai Rumbai to sources of credit based on the field of business is
the most dominant in the agricultural sector (68%) followed by trade,
restaurants and others by 32 percent.
Based
on the above circumstances such BPR Sungai Rumbai powered by natural resource
that is the area of agriculture and plantation, relatively high levels of
aksessibilitas farmers BPR Sungai Rumbai related to characteristics of the
Sungai Rumbai villagers are mostly subsistence farmers.
b)
Distribution Justice.
Credit distributive justice can be seen from the
allocation of the amount of the loan amount received by the debtor at their
respective business sectors. At PT.BPR Sungai Rumbai more lending is allocated
on the debtor in agriculture (68%), while the rest (32%) dispersed in trade,
services, restaurants and more.
Based
on the above information it can be concluded that the higher the chance of
farmers in the use of credit resources, show that the function of RB River
Tassel has been able to help the farm to meet capital requirements, this fact
is not in accordance with the conditions of BPR another in West Sumatra were
less interested in business finance small farmers.
c)
Credit Worthiness.
From the above data, shows that the credit of BPR Sungai
Rumbai mostly accessed by agricultural group (68%) while the remaining 32 per
cent by merchants and other services. Means most of the credit can be utilized
by the agricultural sector. This situation indicates that these financial institutions
in their activities have been successful and is capable of meeting the needs of
small farmers who are credit by BPR into service targets financial institutions
in rural areas. This success is one of the reasons is their ethnicity fellow
members means there is a sense of kinship between them.
d)
The role of the Board in the Capital Mobilization.
PT BPR Sungai Rumbai bank
management election defined and decided by the shareholders at the eeneral
meeting of shareholders) in accordance with the statutes and was attended by at
least 2/3 of the number of members / shareholders, without involving members /
community.
Bank
management consists of Chief Commissioner, Commissioner, Managing Director and
Director. Similarly, the board Aur Rangkiang PT.BPR been through the AGM was
attended by all shareholders with the same management structure with PT BPR
Sungai Rumbai which to comply with the rules Company Limited and Bank Indonesia
regulation.
The
role of the board in capital mobilization is dominant on both BPR, this is due
to the mobilization of capital derived from external sources in the form of
shares. At PT BPR Sungai Rumbai consists of capital stock, as well as in the
form of savings / deposits from the public. Capital accumulation is done
entirely by the management board through the establishment of a capital reserve
set aside from annual profit of 20 percent. Thus there is no collective capital
formation involving contributions members / customers directly.
5.2 Nature
and Dynamics of Small Farm Credit Services as Object
Characteristics
of farming using farmers credit to the three financial institutions studied,
studied based on aspects of the fulfillment of credit, covering land area, land
status, type of business / plant, the intended use of the credit, the amount of
credit, collateral, capital resources, procedures and credit terms , and a
refund system credit / loan. From the analysis of the nature and dynamics of
farming on PT BPR River Tassel each head of the family has 2 ha of land and
consists of 3 (three) certificates (0.25, 0.75 and 1 ha) it can generally be
concluded that the object of service credit of PT BPR River Rumbai can serve
small farms without difficulty in meeting collateral requirements. Almost all
the farmers (98%) own their own land and the vast majority (89%) planted with
food crops (rice and pulses) and partly with plantation crops.
Credits
earned from both the RB Sungai Rumbai specifically for farmers maximum Rp 50
million, while for the farmer groups totaling 30 people can be a credit limit
of US $ 1.1235 billion, - or an average per person may be USD 37.45 million, -,
Requirements and procedures, members do not find
it difficult and can be met, but for non-employees (farmers) still feel the
complexity of the procedures and administrative requirements, as well as the
difficulty of loan repayment system. The results of this analysis clearly shows
that the existence of LKF in the countryside tend not intended to serve the
needs of capital UTK. This conclusion is supported by the fact the empirical
findings of the analysis of the nature and dynamics of the farming area of
land, land status, type of plant, the intended use of credit, collateral, the
amount of capital resources, procedures and administrative requirements, as well
as the loan repayment system. This can be seen in Table 5.4
a. Land.
Scale farming is determined by the area of cultivated land for
agriculture. If the land area cultivated for pertaian businesses, smaller than
0.5 hectares, the farms considered small- scale farming. Meanwhile, when a land
area larger than 0.5 hectares of farming can be categorized as medium and large
scale. In PT.BPR Sungai Rumbai , residents / citizens of each head of the
family has a land area of 2 ha, with three (3) pieces of the certificate of
0.25 ha for the house and yard, 1 ha of plantation land and 0.75 ha for paddy, Land
they use as collateral to secure loans, 70 percent of borrowers are
certificates of land area of 0.75 ha (paddy fields), and 30 percent of the size
of land 1 ha (plantations).
b.
Status Land Ownership.
Status of the land is cultivated land tenure. When
cultivated land is the property itself can be used as loan collateral, whereas
if the land is customary rights / people can not be used as loan collateral,
which is in line with Bank Indonesia regulation that letters of guarantee
(certificate) must be in the name of the borrower.
From
the data obtained, the status of ownership of farm land were cultivated by
farmers on a credit user PT.BPR Sungai Rumbai turned out 98 percent of a
certificate on behalf of customers and only 2 percent of the collateral in the
form Proof of Motor Vehicle Owners (reg).
c.
Type of Business / Plants.
The farmers of LKF basically seek some kind of
business, such as food crops (rice and pulses), plantations is seasonal,
breeder, fisheries, industry, hotels and restaurants and trade. At PT.BPR Sungai
Rumbai , 80 % of farmers cultivate the land with food crops (rice and pulses),
and plantation crops such as oil palm and rubber, while the remaining 20
percent is used for industry, trade and other services.
d.
Uses of Credit.
Farmers who receive credit from the model LKF largely in the
application letter of credit to finance farm. However, some customers use for
purposes such as education, trade and other services.
e.
Collateral.
One of the benefits of farmers in Sungai Rumbai area is the
availability of collateral in the form of land ownership certificates which can
be used as collateral for credit, so the ability of small and medium farmers in
meeting collateral requirements can be met. This is due to each family with a
certificate of land title can be used as collateral. This is reflected in the
statement of RB that 98 percent of the collateral is in the form of
certificates of land and only 2 pesen the collateral in the form reg.
f.
Sources of Capital .
In both LKF (BPR), most farmers own their own capital, but
not sufficient for the purposes of business development, so that one other
source is the credit / loan from a third party. The third party in question is
using the loan to the financial institution to finance the farming operation.
Therefore, farmers are very dependent on loans from financial institutions.
g.
Procedures and Requirements for Credit.
In getting loans, most farmers in both
LKF still feel difficulty although at BPR Sungai Rumbai can be met. Procedures
and credit requirements that must be met relatively complicated. Farmers must
have a viable business, filling out forms, providing completeness of such copy
of ID card, photocopy of family card, photograph, provide collateral, and pay
the cost of provision of 1 percent. Loans can be availed within 7 days to a
month.
h.
Credit Refund System.
BPR Rangkiang Aur, loan repayment system is felt hard by
most farmers. Loans must be repaid each month, with an interest rate between
17.5 to 18 percent. When farmers in arrears, in accordance with the provisions of
Bank Indonesia, the customer imposed several times warning, followed by a late
charge of 1 percent of the number of installments and then just do
sequestration, if it turns through the first process, the second still can not
pay off the loan.
i. Loan Amount.
According to the board of directors of PT BPR LPN Sungai Rumbai
medium and large farmers tend to have easier access to sources of credit and
the loan amount is greater (Rp. 800 million) per-debtor, when compared with
small farmers per-debtor only $ 50 million, with an interest rate of 17.5%
-18%. As for the loan on behalf of the farmers group membered many as 30 people
Rp 1,123.500.000 or average per-debtor Rp 37.45 million.
The
strictness of the regulations made by the government, especially at BPR cause
difficulty small farms access to the center to meet venture capital, 5.3 Role
of Social Capital on the effectiveness of BPR Sungai Rumbai Rumbai.
The
role of social capital (shared values, participation, trust, and financial
contributions, the values of religion and traditional values) of the
effectiveness of LKF (PT.BPR Sungai Rumbai, can be seen in aspects of the
establishment of institutions, electoral administrators and management
activities, capital formation, the credit lending process, as well as
monitoring and evaluation. The conclusion is supported by empirical findings in
the field on the role of social capital in the case of proposed BPR models
based on aspects that are analyzed as follows:
a. process of establishment of the Institute.
The role of social capital in the
process of establishment in PT.BPR Sungai Rumbai at the beginning of the
establishment involve members in all actions and make a decision on interest
rates, the amount of the credit ceiling, the procedures and requirements as well
as sanctions on non-compliance to the rules / norms prevailing in the
institution , But such cooperation is lost after changing the status to the RB,
the regulations set by Bank Indonesia.
At
PT BPR Sungai Rumbai role of social capital is not found at all. This is
because the selection policy board and bank management defined and decided by
the shareholders through the AGM was attended by shareholders, without
involving members / community / customers. So it is not found the role of
values of social capital. Similarly, the management of bank operations carried
out by the board composed of Chief Commissioner, Commissioner, Managing
Director and Director.
c. Capital Formation.
In PT.BPR Sungai Rumbai capital formed in accordance with
the articles of association obtained in the form of shares (equity) and savings
/ deposits. At PT.BPR Sungai Rumbai share capital comprises the society and
savings in the form of savings and deposits. Capital accumulation is done
entirely by the management through the establishment of a capital reserve set
aside from annual profit of 20 percent. Personality formation and capital
accumulation are thereby causing lack of social capital in such activity. In
other words there is no collective capital formation involving contributions
members / customers directly.
d. Lending Process.
BPR Sungai Rumbai does not exist at all, the credit lending
process conducted in accordance with the procedures and requirements have been
defined caretaker berpedoaman to Bank Indonesia regulation. Prospective
customers deal directly with the bank officer without involving institutional
agencies village. This condition causes the absence of the role of social
capital in the process of credit lending. The relationship between the bank
officers and members are business customers only. Although the majority of bank
customers is a local community bank, but the social relationships did not
affect the implementation of the procedures and requirements for credit
lending. Approval of the loan depends on the feasibility aspects of
administration and collateral requirements.
e. Activity Monitoring and Evaluation.
BPR Sungai Rumbai, activity monitoring and
evaluation of operational activities and performance of institutions is
generally performed by the shareholders through each closed financial year. In
terms of supervision and guidance conducted by Bank Indonesia. In addition, in
its function as a secondary bank, BPR must comply with the rules set by Bank
Indonesia, so it automatically BPR bank's operations and performance under
supervision, assessment and development of Bank Indonesia. In this case each.
RB operational activities required to report each month. Thus in the process of
monitoring and evaluation agencies there is no role of social capital mainly
involving the participation of members / customers and communities.
These
findings indicated that the activity of monitoring and evaluation in the RB are
not the role of social capital. This is due to the management of RBs do not
involve members / customers or other people in the activity in question, all
decisions only determined by the board. The role of social capital in BPR
Sungai Rumbai reflected as shown in Table 3 below.
Table 3: The Role of Capital Sosi BPR Sungai Rumbai
6. Conclusion
Based
on the results of research and analysis conducted, it could be concluded in
accordance with the purpose of the study as follows:
1).
The element of trust. The nature of trust between members with members and
between members of the board resulted in the formation of a network that
enables the formation of mutually beneficial cooperation between members in
achieving common goals. These conditions affect the suitability of the
characteristics of the institution with the characteristics of the nature and
dynamics of UTK, this condition causes the BPR is easily accessible by UTK.
Characteristics of institutions characterized by UTK as the main target of
credit services, procedures and administrative requirements although somewhat
complicated, the system returns every month and easily accessible location.
Ease
of access of farmers to financial institutions causing farmers to succeed in
the implementation of agricultural activities. Such a condition indicates that
the character of financial institutions in accordance with the characteristics
of farmers, led to the development of agriculture better.
Cause
a sense of mutual trust between the manager and members by making mutually
beneficial working system between managers and members. Mutual benefit will
arise if the results of the activities carried out benefit the two sides. This
situation will lead to mutual trust, sympathy, mutual participation and sense
of belonging to the institution.
2).
Network Elements. Networking between managers and members that were created on
the basis of mutual trust, lead to effective capital raising collective and
disbursement of loan Sungai Rumbai This is in line with the opinion
of Fukuyama (1995), that the application of social capital is high (trust,
networks and norms) led to community the easily solve a problem and can
simultaneously reduce operating costs.
Success
in internal capital mobilization caused BPR Sungai Rumbai has major source of
capital (initial capital payment and savings), so as to empower UTK well in
fulfilling the capital requirements and increased revenue without relying on external
capital mobilization, especially from the government.
3).
Elements Norma. From the aspect of the rules / policy of the government, the
upfront analysis showed that RB does not have a dependency on the government,
especially about capital so that they can exist and contribute to UTK. Thereby
increasing the confidence of researchers that, nor is it necessarily true that
government regulation will mengahambat development of institutions.
7.
Suggestions
Based
on empirical findings as described above, then the financial institutions in
rural areas should be designed according to each sector of the economy
(farmers, traders, domestic industry, fisheries, livestock, etc.) so that the
uniformity of the profession and the mindset is expected to facilitate communication
and can solve problems with ease.
Sisitem
Operating Procedure (SOP) is formulated based on an element of trust that has
been shown to create an independent local agencies and beneficial in meeting
the capital of farmers and increased incomes. To mengarangi operating costs,
the establishment of a network system also proved to make the system more
effective cooperation and norms / rules are made jointly make the members abide
by the rules according to the agreement turned out to also make a collective
capital formation was effective. It is evident also Grameen Bank group has also
managed to increase the income of poor women in Bangladesh.
Therefore, it is suggested that micro finance
management including BPR can be entrusted / handed over to local bodies under
the supervision of their pemerintrah brackish areas. Specific regulation of
microfinance can be set by local governments either provincial or local
government or city government, as has been done on the Lumbung Pitih Nagari
(LPN) West Sumatra which is governed by governor of the head of the regional of
West Sumatra province in 1976.
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