<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This study examines the micro enterprises of industrial sectors that receive Kredit Usaha Rakyat (People’s Business Credit/KUR) or Commercial Credit (KK) in seven cities in East Java. Firstly, this study aims to measure the technical efficiency of micro enterprises in the industrial sector in East Java that accept KUR and KK using the Data Envelopment Analysis method; secondly, to examine the factors that influence the technical efficiency of micro enterprises, which receive KUR and KK with Tobit Regression. Unlike others’ researches, this paper attempts to determine the influence of technical efficiency and other factors on the poverty status of micro entrepreneurs using logistic regression. The average technical efficiencies of KUR and KK recipient micro businesses using the assumptions of the DEA VRS model are 0.94 and 0.77. While the average technical efficiencies of KUR and KK recipient micro businesses using the assumptions of the DEA CRS model are 0.88 and 0.71. The factors that influence the technical efficiency of micro enterprises recipients of KUR and KK are profit, experience, geographical location, amount of credit, KUR access, the credit realization period, and dummy variable of food and beverage products. The factors that influence the poverty status of micro-entrepreneurs are technical efficiency, income, KUR access, gender, number of household member, and geographical location. The results of this research can be a material consideration for the government in formulating policies.</p></abstract>

This study examines the micro enterprises of industrial sectors that receive Kredit Usaha Rakyat (People’s Business Credit/KUR) or Commercial Credit (KK) in seven cities in East Java. Firstly, this study aims to measure the technical efficiency of micro enterprises in the industrial sector in East Java that accept KUR and KK using the Data Envelopment Analysis method; secondly, to examine the factors that influence the technical efficiency of micro enterprises, which receive KUR and KK with Tobit Regression. Unlike others’ researches, this paper attempts to determine the influence of technical efficiency and other factors on the poverty status of micro entrepreneurs using logistic regression. The average technical efficiencies of KUR and KK recipient micro businesses using the assumptions of the DEA VRS model are 0.94 and 0.77. While the average technical efficiencies of KUR and KK recipient micro businesses using the assumptions of the DEA CRS model are 0.88 and 0.71. The factors that influence the technical efficiency of micro enterprises recipients of KUR and KK are profit, experience, geographical location, amount of credit, KUR access, the credit realization period, and dummy variable of food and beverage products. The factors that influence the poverty status of micro-entrepreneurs are technical efficiency, income, KUR access, gender, number of household member, and geographical location. The results of this research can be a material consideration for the government in formulating policies.

The Role of Banking Capital in Industrial Sector Micro Enterprises for Poverty Alleviation: A Study in East Java, Indonesia

Foundations of Management

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

This study examines the micro enterprises of industrial sectors that receive Kredit Usaha Rakyat (People’s Business Credit/KUR) or Commercial Credit (KK) in...

The Role of Banking Capital in Industrial Sector Micro Enterprises for Poverty Alleviation: A Study in East Java, Indonesia

Published Online: Aug 03, 2019

Page range: 131 - 142

DOI: https://doi.org/10.2478/fman-2019-0011

Keywords
micro credit, micro enterprise, poverty, technical efficiency

© 2019 Atik Purmiyati et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The Role of Banking Capital in Industrial Sector Micro Enterprises for Poverty Alleviation: A Study in East Java, Indonesia

Published Online: Aug 03, 2019

Page range: 131 - 142

DOI: https://doi.org/10.2478/fman-2019-0011

Keywordsmicro credit, micro enterprise, poverty, technical efficiency

© 2019 Atik Purmiyati et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Keywords
micro credit, micro enterprise, poverty, technical efficiency