Proceedings of the First Lekantara Annual Conference on Public Administration, Literature, Social Sciences, Humanities, and Education, LePALISSHE 2021, August 3, 2021, Malang, Indonesia

Research Article

The Role of Institutions on Financial Inclusion in Indonesia

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  • @INPROCEEDINGS{10.4108/eai.3-8-2021.2315089,
        author={Syofriza  Syofyan and Bahtiar  usman and Harmaini  Harmaini and Naptania  Ilmas},
        title={The Role of Institutions on Financial Inclusion in Indonesia},
        proceedings={Proceedings of the First Lekantara Annual Conference on Public Administration, Literature, Social Sciences, Humanities, and Education, LePALISSHE 2021, August 3, 2021, Malang, Indonesia},
        publisher={EAI},
        proceedings_a={LEPALISSHE},
        year={2022},
        month={1},
        keywords={financial inclusion; institutional; financial outreach},
        doi={10.4108/eai.3-8-2021.2315089}
    }
    
  • Syofriza Syofyan
    Bahtiar usman
    Harmaini Harmaini
    Naptania Ilmas
    Year: 2022
    The Role of Institutions on Financial Inclusion in Indonesia
    LEPALISSHE
    EAI
    DOI: 10.4108/eai.3-8-2021.2315089
Syofriza Syofyan1,*, Bahtiar usman1, Harmaini Harmaini1, Naptania Ilmas1
  • 1: Department of Economics, Faculty of Economics And Business, Trisakti University, Indonesia
*Contact email: syofriza.syofyan@trisakti.ac.id

Abstract

Increasing economic growth can be achieved by increasing financial deepening that involves financial inclusion. Household savings can be be a solution to finance development, if it can accumulate in large numbers and involve the whole society (inclusive). In institutional theory, it is revealed that banking system institutions can encourage / inhibit bank competition and are translated as transaction costs for the public in accessing financial institutions. This research aims to analyze the role of institutions on financial inclusion. Institutional role on financial inclusion was analyzed using OLS regression method in time series data, monthly from June 2004 to June 2019. The results of the study show that the institutional factor as measured the number of bank service offices is also a significant determining factor in influencing financial inclusion. Increasing financial inclusion can be achieved by increasing the affordability, (financial outreach) of people to formal financial institutions, both physically and non-physically (digital / virtual).