Family and Friends Versus Formal Financial Institutions: Lessons Learned About Financial Inclusion of Low Income Families in Greater Jakarta, Indonesia
19 Pages Posted: 20 Aug 2014 Last revised: 21 Aug 2014
Date Written: December 10, 2013
This paper aims to gain further understanding on what factors contribute such reliance to informal channels, such as family and friends. This study employs survey data obtained from 1,220 families across Greater Jakarta, Indonesia. Findings showed that people who do not rely on formal channel for deficit financing are 2.6 times more likely to rely on their family and friends, while people who do not rely on their family or friends are 7.1 times more likely to rely on formal financing options. This may indicate that formal financing channel act as direct substitute to informal channels of family and friends for low income families in Greater Jakarta area.
Keywords: Financial Inclusion, Low Income Families, Family and Friends, Indonesia
JEL Classification: D60, G20, I31
Suggested Citation: Suggested Citation