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

See all articles by Zaäfri A. Husodo

Zaäfri A. Husodo

Universitas Indonesia, Graduate School of Management

Viverita D.

Department of Management Faculty of Economics and Business Universitas Indonesia

Dwi Nastiti Danarsari

University of Indonesia (UI)

Imam Salehudin

University of Indonesia (UI) - Department of Management; University of Queensland, Business School, Students; University of Indonesia (UI) - Faculty of Economics and Business

Date Written: December 10, 2013

Abstract

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

Husodo, Zaäfri A. and D., Viverita and Danarsari, Dwi Nastiti and Salehudin, Imam, Family and Friends Versus Formal Financial Institutions: Lessons Learned About Financial Inclusion of Low Income Families in Greater Jakarta, Indonesia (December 10, 2013). Available at SSRN: https://ssrn.com/abstract=2482962 or http://dx.doi.org/10.2139/ssrn.2482962

Zaäfri A. Husodo

Universitas Indonesia, Graduate School of Management ( email )

Depok, West Java 16424
Indonesia

Viverita D.

Department of Management Faculty of Economics and Business Universitas Indonesia ( email )

Depok, West Java 16424
Indonesia
+62217270164 (Phone)
+622178849155 (Fax)

Dwi Nastiti Danarsari

University of Indonesia (UI) ( email )

Jl. Prof. Sumitro Djojohadikusumo
Depok, DKI 16424
Indonesia

Imam Salehudin (Contact Author)

University of Indonesia (UI) - Department of Management ( email )

Campus UI Depok
Depok, West Java 16424
Indonesia

University of Queensland, Business School, Students ( email )

St Lucia
Australia

University of Indonesia (UI) - Faculty of Economics and Business ( email )

Kampus Baru
Depok, West Java 16424
Indonesia

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