The Determinants of Financial Inclusion: Evidence from Indonesian Districts

Abstract

The financial sectors with their various derivative products have become important media in supporting economic and social activities. This condition was growing more conducive by rapid development of information technology, so that financial access can reach various groups of people. Financial inclusion has become the government’s program which was aimed to encourage the financial system which can be accessed by all segments of society, so they were expected to boost the economic growth and to overcome the poverty. Jember and Bondowoso regency that play as the barometer of the regional economic growth in East Java make financial inclusion program as the development priority. This study was aimed to describe of society’s financial inclusion in Bondowoso and Jember Regency; and indentify the determinant of society’s financial inclusion in Bondowoso and Jember Regency which was used quantitative descriptive from existing and tabulation data through interviews and logit model. The results of the analysis showed that the aggregate level of financial inclusion in Bondowoso and Jember was good enough which was indicated by the availability of sufficient number of banking institutions with financial service facilities. But some people still find some difficulties in reaching financial due to low financial literacy levels and the limited information from the public, it was caused by the fears toward other individual financial service providers. The society’s access to financial credit facility especially business loans was quite high and becomes potential indication in developing the real sector.