Journal of Scientific Papers


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ISSN 2071-789X

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  • General Founder and Publisher:

    Centre of Sociological Research


  • Publishing Partners:

    University of Szczecin (Poland)

    Széchenyi István University, (Hungary)

    Mykolas Romeris University (Lithuania)

    Alexander Dubcek University of Trencín (Slovak Republic)

  • Membership:

    American Sociological Association

    European Sociological Association

    World Economics Association (WEA)




The role of branchless banking in performance of households’ micro and small enterprises: The evidence from Indonesia

Vol. 12, No 3, 2019

Ktut Silvanita Mangani,


Universitas Kristen Indonesia,

Jakarta, Indonesia


The role of branchless banking in performance of households’ micro and small enterprises: The evidence from Indonesia


Yusman Syaukat,


Bogor Agricultural University, Bogor, Indonesia


Bustanul Arifin,


Universitas Lampung, Lampung, Indonesia


Mangara Tambunan,


Bogor Agricultural University, Bogor, Indonesia




Abstract. In Indonesia, branchless banking (BB) for low-income communities is a new financial channel to create a financial system accessible to all levels of society. This research aims to investigate how to develop BB programs to improve the performance of households’ micro and small enterprises (MSEs) in rural areas. The data was collected from 97 MSEs who conducted financial transactions at BB agents. For a case study, as many as 32 agents out of 360 BB agents in Bogor District, West Java, Indonesia were chosen purposively from 13 sub-districts. Then, 97 MSEs were chosen with the experience of conducting transactions through BB agents.  The study analyzes the household economic behavior using the model of a simultaneous structural equation, that has not been discussed in prior literature on Branchless Banking studies. The study has found that an increase in the value of financial transactions and investment variables have a positive impact with larger magnitudes on the production and other endogenous variables than an increase of those variables independently. However, the impact on household savings is small. The results imply that the development of MSEs through BB programs is not enough by only providing the speed and ease of financial transactions through the presence of BB agents in rural areas that are close to local businesses. Capacity building by increasing the investment value of micro and small enterprises becomes a factor driving the success of BB programs.


Received: March, 2019

1st Revision: June, 2019

Accepted: September, 2019


DOI: 10.14254/2071-789X.2019/12-3/8

JEL ClassificationD13, O12, G20

Keywords: branchless banking, financial inclusion, household economic behaviour, micro and small enterprise, simultaneous equation model