Social Capital and Credit in a Javanese Village

Influence of local associations on rural credit
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This paper examines the influence of social capital on rural credit.It describes the data used in the research as:

  • Location of field survey;
  • Structure of the questionnaire;
  • Timeline of the survey conducted;
  • Number of respondents;
  • Dimensions of local associations applied in the research including:
    • Number of membership,
    • Meeting attendance,
    • Participation in decision making.

The paper discusses the findings from the survey and states that:

  • 80% of heads of households are members of local financial institutions;
  • Average membership of the group, with access to formal credit, is larger than the other group;
  • Average of meeting attendance of respondents is 3.04 in the last three months;
  • 23% of the respondents in the group that have access to formal credit were categorized as formal leaders.

The paper presents an analysis from the studies showing impact of social capital on each type of credit and highlights that:

  • Meeting attendance positively influences the amount of formal credit;
  • Informal credit is avoided in case of high membership in local associations;
  • Negative relation exists between the number of memberships and the amount of credit;
  • Formal and informal leaders have:
    • Positive and significant influence on amount of formal credit,
    • Insignificant influence in the case of informal credit.

The paper concludes that social structure should be considered apart from the existing social capital in rural society for implementation of a credit program.

About this Publication

By Brata, A.