Analysis of 4C Principles and Credit Eligibility of People's Businesses (Case Study on MSMEs Built by Mandiri BUMN House, Bogor)
Abstract
Less than 10% of Micro and Small Enterprises (MSEs) under the member of Rumah BUMN Mandiri, Bogor have successfully obtained Kredit Usaha Rakyat (KUR) from formal financial institutions. This study aims to determine the influence of the 4C Principles; character, capacity, capital, and condition, on the eligibility status for granting KUR to MSEs under the member of Rumah BUMN Mandiri, Bogor, and to formulate a business incubation program scheme based on the concept of Integrated Microfinance Management (IMM). The quantitative approach used is an independent t-test and Structural Equation Modeling (SEM), while the qualitative approach is conducted through thematic analysis. Data collection is carried out using purposive sampling through questionnaires distributed to 109 MSEs under the member of Rumah BUMN Mandiri, Bogor, and in-depth interviews with informed respondents. The research results indicate that the aspects of character, capacity, and condition significantly influence the eligibility status for KUR, while the capital aspect does not have a significant influence. There is a need for synergy between Rumah BUMN Mandiri, Bogor, and Bank Mandiri to increase the number of KUR recipients through an entrepreneurship empowerment program oriented towards achieving the output and outcome of the business incubation process, as well as effective socialization of business credit management.
Downloads
References
Akerlof, G. A. (1970). The Market for “Lemons”: Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics, 84(3), 488–500.
Alam, J., Moir, R., & Ibn Boamah, M. (2021). Gender and micro-credit: who repays? Evidence from a Canadian individual-lending approach. Journal of Small Business and Entrepreneurship, 33(3), 249–267. https://doi.org/10.1080/08276331.2019.1606966
Álvarez Jaramillo, J., Zartha Sossa, J. W., & Orozco Mendoza, G. L. (2019). Barriers to sustainability for small and medium enterprises in the framework of sustainable development—Literature review. Business Strategy and the Environment, 28(4), 512–524. https://doi.org/10.1002/bse.2261
Ayyash, S. Al, McAdam, M., & Oagorman, C. (2022). Towards a New Perspective on the Heterogeneity of Business Incubator-Incubation Definitions. IEEE Transactions on Engineering Management, 69(4), 1738–1752. https://doi.org/10.1109/TEM.2020.2984169
Beck, T. (2013). Bank Financing for SMEs - Lessons from the Literature. National Institute Economic Review, 225(1). https://doi.org/10.1177/002795011322500105
Boadi, I., & Mertens, G. (2018). SME financing: a review of the literature. 21(2), 135–179.
Bosques-Brugada, G., Mendoza-Del Villar, L. A., Oliva-López, E., Garza-Reyes, J. A., & Tupa, J. (2020). Specialized business incubators as a strategy for small and medium-sized enterprises in the industry 4.0 era – a systemic approach. Proceedings of the International Conference on Industrial Engineering and Operations Management, August, 1462–1473.
Boushnak, E., Rageb, M. A., Ragab, A. A., & Sakr, A. M. (2018). Factors Influencing Credit Decision for Lending SMEs: A Case Study on National Bank of Egypt. 5, 1–17. https://doi.org/10.4236/oalib.1104996
Campanella, F. and S. L. (2019). Do Personal Characteristics of Manager Affect SMEs’ Access to Bank Loan? International Journal of Economics, Business and Finance, 6(2), 1–14.
Chowdhury, M. (2017). Factors Affecting Access to Finance of Small and Medium Enterprises (SMEs) of Bangladesh. The USV Annals of Economics and Public Administration, 2, 55–68.
Cohen, J. (1988). Statistical Power Analysis for The Behavioral Sciences (Second Edi). Lawrence Albraum Associates.
Elvis, A., Makhdalena, & Hardisem, S. (2019). ANALYSIS OF THE IMPLEMENTATION OF THE 5C PRINCIPLES ON THE STOCK CREDIT IN PT. ADIRA DINAMIKA MULTIFINANCE TBK . PEKANBARU MACET PADA PT . ADIRA DINAMIKA MULTIFINANCE TBK . JOM FKIP, 6, 1–14.
Erdogan, A. I. (2018). Factors affecting SME access to bank financing: an interview study with Turkish bankers. Small Enterprise Research, 00(1), 1–13. https://doi.org/10.1080/13215906.2018.1428911
Erdogan, A. I. (2019). Determinants of perceived bank financing accessibility for SMEs: evidence from an emerging market. Economic Research-Ekonomska Istraživanja, 32(1), 690–716. https://doi.org/10.1080/1331677X.2019.1578678
Eze, B. U. (2019). Bank Loans and Small Medium Enterprises’ (SMES) Performance in Lagos, Nigeria 52 BANK LOANS AND SMALL MEDIUM ENTERPRISES’ (SMES) PERFORMANCE IN LAGOS, NIGERIA. June.
Fama, E. F., & French, K. R. (2000). Testing Tradeoff and Pecking Order Predictions About Dividends and Debt. In SSRN Electronic Journal (Issue 506). https://doi.org/10.2139/ssrn.199431
Frank, M. Z., Goyal, V. K., Chen, L., Dasgupta, S., Eckbo, E., Hennessy, C., Ritter, J., Roberts, M., Wang, T., & Zender, J. (2007). Trade-off and Pecking Order Theories of Debt *.
Gerlach, S., & Brem, A. (2015). What determines a successful business incubator? Introduction to an incubator guide. International Journal of Entrepreneurial Venturing, 7(3), 286–307. https://doi.org/10.1504/IJEV.2015.071486
Hair, J. F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019). The Results of PLS-SEM Article information. European Business Review, 31(1), 2–24.
Harrison, R., Youwei, L., Samuel A, V., & Yuliang, W. (2022). Why do small businesses have difficulty in accessing bank financing? International Review of Financial Analysis, 1–49.
Hayduk, L. A., dan Littvay, L. (2012). Should researchers use single indicators, best indicators, or multiple indicators in structural equation models? BMC Medical Research Methodology, 12(1), 1. https://doi.org/10.1186/1471-2288-12-159
Ismail Albalushi, K., & Naqshbandi, M. M. (2022). Factors Affecting Success and Survival of Small and Medium Enterprises in the Middle East. Knowledge, 2(3), 525–538. https://doi.org/10.3390/knowledge2030031
Joseph F Hair, Tomas M, H., Christian, M. R., Marko, S., Nicholas P Danks, & Soumya, R. (2021). Review of Partial Least Squares Structural Equation Modeling (PLS-SEM) Using R: A Workbook. In Structural Equation Modeling: A Multidisciplinary Journal. Springer. https://doi.org/10.1080/10705511.2022.2108813
Jude, F. A., & Adamou, N. (2018). Bank Loan Financing Decisions of Small and Medium-Sized Enterprises: The Significance of Owner / Managers ‟ Behaviours. 10(5), 231–241. https://doi.org/10.5539/ijef.v10n5p231
Khairulluzin bin Jamil, I., Hazli binti Zakaria, R., & binti Othman, A. (2019). An Evaluation of Financing Without Collateral to Small and Medium Enterprises in Malaysia: a Conceptual Framework. Academic Journal of Business and Social Sciences, 3(1), 1–19.
Khan, M. A., Asima, S., Zahid, S., Le, T. M. H., & Qaiser, N. (2020). Determinants of entrepreneurial small and medium enterprises performance with the interaction e ff ect of commercial loans. Asia Pacific Journal of Innovation and Entrepreneurship, 14(2), 161–173. https://doi.org/10.1108/APJIE-11-2019-0079
Kline, R. B. (2012). Principles and Practice of Structural Equation Modeling. In Canadian Graduate Journal of Sociology and Criminology (Fourth Edi, Vol. 1, Issue 4). The Guilford Press. https://doi.org/10.15353/cgjsc.v1i1.3787
Bank Indonesia, Tim Pengembangan. (2006). Kajian Inkubator Bisnis dalam Rangka Pengembangan UMKM.
Kunoviku-demiri, F., Tmava, Q., & Durguti, E. A. (2021). ANALYZING THE VARIABLES THAT INFLUENCE ACCESS TO BANK FINANCING FOR SMALL AND MEDIUM ENTERPRISES. 7(3), 12–32.
Larson-hall, J. (2010). A guide to doing statistics in second language research using SPSS and R. In G. Susan H & M. Alison (Eds.), Choice Reviews Online (Vol. 53, Issue 08). Routledge Taylor & Francis Group. https://doi.org/10.5860/choice.195411
Martinez, L. B., Scherger, V., & Guercio, M. B. (2019). SMEs capital structure: trade-off or pecking order theory: a systematic review. Journal of Small Business and Enterprise Development, 26(1), 105–132. https://doi.org/10.1108/JSBED-12-2017-0387
Mehmetoglu, M., & Sergio, V. (2021). Structural Equation Modelling with Partial Least Squares Using Stata and R. In CRC Press (Vol. 13, Issue 1). Taylor & Francis Group, LLC.
Moradi, M., Imanipour, N., Arasti, Z., & Mohammadkazemi, R. (2020). Poverty and entrepreneurship: A systematic review of poverty-related issues discussed in entrepreneurship literature. World Review of Entrepreneurship, Management and Sustainable Development, 16(2), 125–152. https://doi.org/10.1504/WREMSD.2020.105984
Muhammad Ma’rur. (2020). Prinsip 5C Sebagai Instrumen Utama Dalam Analisis Pembiayaan. ISLAMINOMICS: Journal of Islamic Economic, Business and Finance, 10(1), 55–56.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221. https://doi.org/10.1016/0304-405X(84)90023-0
Nikolić, N., Jovanović, I., Nikolić, D., Mihajlović, I., & Schulte, P. (2019). Investigation of the Factors Influencing SME Failure as a Function of Its Prevention and Fast Recovery after Failure. Entrepreneurship Research Journal, 9(3), 1–21. https://doi.org/10.1515/erj-2017-0030
Nizaeva, M., & Ali, C. (2018). Determinants of the Financing Obstacles Faced by SMEs: An Empirical Study of Emerging Economies. Journal of Economic and Social Studies, 7(2), 81–99.
Octavia, A. N., Wicaksono, G. S., Sari, D. P., & Mambay, V. V. (2021, March 8). Empirical testing of trade off theory and pecking order theory on companies in the LQ45 index on the Indonesian stock exchange. https://doi.org/10.4108/eai.4-11-2020.2304563
Pandula, G. (2011). An Empirical Investigation of Small and Medium Enterprises’ Access to Bank Finance. Proceedings of ASBBS, 18(1), 255–273.
Pearl, J. (2012). The causal foundations of structural equation modeling. Handbook of Structural Equation Modeling, June, 68–91.
Pham, H. D. (2017). Determinants of New Small and Medium Enterprises (SMEs) Access to Bank Credit: Case Study in the Phu Tho Province, Vietnam. 12(7), 83–99. https://doi.org/10.5539/ijbm.v12n7p83
Polato, M., & Beltrame, F. (2019). Bank’s Asset Quality Review Using Debt Service Coverage Ratio: An Empirical Investigation Across European Firms. 225–244. https://doi.org/10.1007/978-3-030-16295-5_9
Prasetio, E. A., Umbara, A. N., & Okdinawati, L. (2019). Indicator of Successful Incubator in Indonesia: Comparison Between University-Based Incubator and Private Business Incubator. Proceeding Book of the 4th ICMEM 2019 and the 11th IICIES 2019, August, 791–795.
Rahman, A., Rahman, M. T., & Belas, J. (2017a). Determinants of SME Finance: Evidence from Three Central European Countries. Review of Economic Perspectives, 17(3), 263–285. https://doi.org/10.1515/revecp-2017-0014
Rahman, A., Rahman, M. T., & Belas, J. (2017b). Determinants of SME Finance: Evidence from Three Central European Countries. 17(3), 263–285. https://doi.org/10.1515/revecp-2017-0014
S, R. K. P., & Trivedi, P. (2019). Determinants of SME Credit in Mumbai-Empirical Analysis on Factors DETERMINANTS OF SME CREDIT IN MUMBAI-EMPIRICAL ANALYSIS ON. 53(2).
Sapto, H., Bartiar, & Fajar, A. (2020). Analisa Data Penelitian Kualitatif (Konsep, Teknik dan Prosedur Analisis). Badan Penerbit UNM.
Shahriar, A. Z. M., Unda, L. A., & Alam, Q. (2020). Gender differences in the repayment of microcredit: The mediating role of trustworthiness. Journal of Banking and Finance, 110. https://doi.org/10.1016/j.jbankfin.2019.105685
Statistik, B. P. (2020). Profil Industri Mikro dan Kecil.
Taghizadeh-hesary, F., Yoshino, N., Fukuda, L., & Rasoulinezhad, E. (2020). A model for calculating optimal credit guarantee fee for small and medium-sized enterprises. Economic Modelling, March. https://doi.org/10.1016/j.econmod.2020.03.003
Umiyati, E., & Amir, A. (2019). Determinant of micro, small and medium enterprises on carrying out a credit loan in Jambi Province. 6(6).
Waweru, J. N. (2017). Determinants of Choice of Alternative Financing Modes for SME’ s , a Review of Literature. International Journal of Academic Research in Business and Social Sciences, 7(4), 608–617. https://doi.org/10.6007/IJARBSS/v7-i4/2836
Yudaruddin, R. (2020). Determinants of Micro-, Small- and Medium-Sized Enterprise Loans by Commercial Banks in Indonesia. 7(9), 19–30. https://doi.org/10.13106/jafeb.2020.vol7.no9.019
Zoričák, M., Gnip, P., Drotár, P., & Gazda, V. (2020). Bankruptcy prediction for small- and medium-sized companies using severely imbalanced datasets. Economic Modelling, 84(October 2018), 165–176. https://doi.org/10.1016/j.econmod.2019.04.003
Copyright (c) 2024 Wiji Astuti, Sulaeman Rahman Nidar, Yudi Ahmad Faisal
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
