Sustainability of Agricultural Microfinance Institution: Empirical Evidence from Yogyakarta, Indonesia

Abstract

Providing sustainable financial services for agriculture continues to be a challenge in spite of billions of dollars having been spent in subsidies to strengthen financial institutions to serve the sector.This study identified factors that influence the sustainability of Agricultural Microfinance Institution (MFI-A) in Yogyakarta, Indonesia. The research applied survey approach by conducting interview towards 111 managers of MFI-Ain Special District of Yogyakarta. The sustainability of the institutions were measure by self-help funding. The factors influencing the sustainability of MFI-Ain Rural Agribusiness Development were analyzed using multiple linear regression analysis technique. The results of the study showed that: the factors which influenced the self-help funding to support the sustainability of MFI-Awere, the credit lending for offarm activity credit screening, monitoring and accompaniment, incentive and sanction mechanism.