COMMERCIALIZATION OF MICROFINANCE IN INDONESIA: THE SHORTAGE OF FUNDS AND THE LINKAGE PROGRAM

摘要

Financial sustainability is important for management of microfinance institutions, but funding is always a difficult problem for them. Commercialization is expected to be one of the solutions. This article focuses on the people's credit bank (BPR), which is a commercialized but small-scale unit bank in Indonesia, and examines the effects of a liquidity support scheme, a linkage program, on BPR. The results of regression analysis, using financial data from a total of 1,104 BPRs, reveal that bank loanscontribute to the expansion of BPR credit. Moreover, the effect of bank loans through the linkage program has been larger than that of bank loans only. Funds from saving and deposits have had the largest effect on the expansion of BPR credit. Concerningprofitability, bank loans affect the return on assets positively, but there is no obvious effect of participation in the linkage program.