Abstract
This study aims to investigate the networking of regional development banks (BPDs) to reach potential customers that are considered non-bankable. A market chain method is used to trace the pattern of networking starting from the BPD down to the final customers. The study involved 13 out of 26 BPDs across Indonesia. In each sampled BPD, interviews were conducted at the head office and two branch offices, one of which was situated in an agricultural area and the other in an industrialized area. Micro-finance institutions (MFIs), which are directly linked with BPDs, were also interviewed and snowballing random sampling has been used to select the sampled MFIs. The results suggest that the network formation between BPDs and MFIs depends on the structure and economic conditions of the area where the BPDs are situated. There is a strong tendency of networking to occur between bank-based MFIs. The cooperation between bank-based MFIs and non-bank-based MFIs tends to be limited since the transaction costs and the risks of establishing such cooperation are substantially high.
Author: Rimawan Pradiptyo, Catur Sugiyanto, Sumiyana, Inayati Dwiputri, Yudistira Permana, Eri Kusuma, Wihana Jaya, Fuad Rahman & Andreas Kurniawan.
This paper is published in SEADI Discussion Paper No. 4, 2013.