Micro-Loans and Household Economies: Evidence in Indonesia

• Main Author: S. Suratini
• Format: Article
• Language: Indonesian
• Published: Universitas Islam Negeri Syarif Hidayatullah Jakarta 2018-01-01
• Series: Signifikan
• Subjects: micro loans; household economies; asymmetric information
• Online Access: http://journal.uinjkt.ac.id/index.php/signifikan/article/view/5954

<p>Micro-loans intended to improve household economies are a fascinating subject for research because a comparative analysis of before and after taking micro-loans would result in a bias selection. Households have different prior conditions from one another, so the difference found during the study is not entirely due to receiving micro-loans. There is a risk of moral hazard risk due to asymmetric information. This research adopts the double difference (DD) fixed effects method to estimate the extent of micro-loans’ impact. Results indicate that micro-loans are significantly influencing the household economies. The impact size was relatively small that it was not apparent during regression. As an implication, micro-loans intended for productive purposes can help improve household economic conditions. Effective and sustainable monitoring and counsel can minimize the risk of moral hazard.</p><p>DOI: <a href="http://dx.doi.org/10.15408/sjie.v7i1.5954">10.15408/sjie.v7i1.5954</a></p>