The Effect of Credit Procedures, and Credit Interest Rates on the Decision to Take Credit at Commercial Banks in MSMEs in Bali

Desak Made Sukarnasih; Desak Ayu Sriary Bhegawati

doi:10.54209/jasmien.v5i01.877

Desak Made Sukarnasih Universitas Pendidikan Nasional Denpasar
Desak Ayu Sriary Bhegawati Universitas Mahasaraswati Denpasar

DOI: https://doi.org/10.54209/jasmien.v5i01.877

Keywords: Decisions to accept kredit, Credit procedures, Loan interest rates, Commercial Bank.

Article Metrics

Abstract view : 251 times

Abstract

This study examines the impact of interest rates and credit procedures on MSMEs' decisions to take loans from commercial banks. Using regression analysis, the research tests hypotheses with a sample of 100 MSMEs in Bali, selected from a population of 15,332 MSMEs using the Slovin method. Data was collected through a survey of MSMEs that had applied for or considered commercial bank loans in 2023. Results show that credit procedures have a positive and significant influence on MSMEs' loan decisions, while interest rates do not significantly affect their choices. These findings indicate that MSMEs prioritize the efficiency and ease of credit processes over interest rate considerations. The study highlights the importance of streamlining credit procedures to enhance financing access for MSMEs and recommends further research into other factors that may influence MSMEs' credit decisions. This research contributes to understanding the dynamics of MSME financing in the context of Bali's economic landscape.

References

[1.] Adebayo, F. O., & Adofu, I. (2021). Effect of interest rate deregulation on loans and advances of deposit money banks in Nigeria. International Journal of Research and Innovation in Social Science, 5(4), 345-352.
[2.] Bhegawati, D. A. S. (2018). Analisis Fungsi Intermediasi Dan Risiko Kredit Macet (Studi Kasus Perbandingan Bank Umum Dan BPR) Di Provinsi Bali. KRISNA: Kumpulan Riset Akuntansi, 10(1), 22-31.
[3.] Bhegawati, D. A. S., & Utama, M. S. (2020). The role of banking in Indonesia in increasing economic growth and community welfare. South East Asia Journal of Contemporary Business, Economics and Law, 22(1), 83-91.
[4.] Ebitu, E. T., Glory, B., & Alfred, U. J. (2016). An appraisal of Nigeria’s micro, small and medium enterprises (MSMEs): Growth, challenges and prospects. British Journal of Marketing Studies, 4(5), 21-36.
[5.] Esubalew, A. A., & Raghurama, A. (2023). Commercial bank financing to micro, small, and medium enterprises (MSMEs): the mediating and multi-group effect analysis. Journal of Small Business & Entrepreneurship, 35(3), 307-335.
[6.] Fachrizah, H., Sihombing, M. A., Justinus, Y. C., Revindo, M. D., & Riefky, T. (2022). Financing creative industries in Indonesia. CREATIVE ECONOMY 2030.
[7.] Husaeni, U. A. A. (2021). Determinants of Micro and Small Business Financing In Sharia Commercial Banks In Indonesia. Jurnal Ilmiah Ekonomi Islam, 7(3), 1499-1504.
[8.] Herman, H., Tobing, V. C. L., Fadlilah, A. H., Shaddiq, S., & Bahit, M. (2023). Loan interest rates, credit guarantees, and lifestyle on credit making decisions at financing companies. JPPI (Jurnal Penelitian Pendidikan Indonesia), 9(4), 471-482.
[9.] Hestiwi, M. N. (2021). Procedure For Granting People's Business Credit In PT. Indonesian People's Bank Tamalate Unit Panakkukang Makassar Branch. Agency Journal of Management and Business, 1(2), 87-96.
[10.] Hossain, N. (2023). A comparative analysis of conventional and modern methods of credit risk assessment in financial institutions: implications for micro, small and medium enterprises (MSMEs).
[11.] Kathuku, J. K. (2017). Commercial Banks Lending Strategies and Growth of Micro and Small Enterprises in Kenya (Doctoral dissertation, COHRED, JKUAT).
[12.] Mkwizu, K. H., Wilbard, J. G., Mbilinyi, B. D., & Maliva, N. S. (2018). Factors influencing consumers' convenience shopping of industrial products: a study of kinondoni district. Business management review, 21(1), 23-33.
[13.] Ogundipe, A. S., Akintola, A. F., & Olaoye, S. A. (2020). Interest rates and loan performance of deposit money banks in Nigeria. International Journal of Economics and Business Review, 8(1), 13-20.
[14.] Onyango, P. O. (2015). The relationship between loan duration and interest rates for commercial banks in Kenya (Doctoral dissertation, University of Nairobi).
[15.] Oswari, T., Judijanto, L., & Destiana, R. (2023). Social Capital, Financial Capital, and Entrepreneurial Orientation: Keys to Performance in Indonesia’s MSME Clothing Industry. International Journal of Business, Law, and Education, 4(2), 1011-1029.
[16.] Singh, S. K., Basuki, B., & Setiawan, R. (2021). The effect of non-performing loan on profitability: Empirical evidence from Nepalese commercial banks. The Journal of Asian Finance, Economics and Business, 8(4), 709-716.
[17.] Sormin, M., Saparso, S., & Wahyoedi, S. (2022). The Effect Of Interest Rate Perception And Credit Procedures On Car Purchase Decisions Mediated By Purchase Interntion In Pt. Maybank Indonesia Finance Medan Branch 2021. International Journal of Science, Technology & Management, 3(4), 1230-1243.
[18.] Tripathi, D. K., Chadha, S., & Tripathi, A. (2024). Uncovering the hidden roots: the tapestry of working capital efficiency in Indian MSMEs. Journal of Global Operations and Strategic Sourcing, 17(1), 53-73.
[19.] Wulan, N. R., Iqbal, M., & Wibowo, D. H. (2023). Banking Performance Affects Working Capital Loans Growth: Evidence from the Indonesian Banking Industry.
[20.] Yudaruddin, R. (2020). Determinants of micro-, small-and medium-sized enterprise loans by commercial banks in Indonesia. The Journal of Asian Finance, Economics and Business, 7(9), 19-30.