Research Article Open Access

IMPACT OF MICROFINANCE INSTITUTIONS ON EMPOWERMENT, PERFORMANCE, AND LIVING STANDARDS OF FARMERS’GROUP: A CASE STUDY ON MICROFINANCE INSTITUTIONS IN SOUTH SUMATERA-INDONESIA

Abstract

Capital shortage caused farmers working in low productivity, besides that limitedness in human resources is also a serious obstacle for many farmers and group of farmers, especially in the aspects of management and production techniques, developing product, quality control, business organization, marketing techniques, and market research. The existence of microfinance institutions with the provision of loans with easy terms and consultation services program are an alternative solution to solve the problems. Primary data was collected through survey technique from 200 respondents and taken by random sampling method and was analyzed by structural equation modelling (SEM). The result showed that in aggregate program microfinance which consisted of farmer financing program and consultation services program had a positive impact towards farmers’ group empowerment and farmer’s group performance. Farmers’ group empowerment and farmers’ group performance had a positive impact toward farmers’ group living standard. It means the hypothesis was accepted. From goodness of fit indices showed that the analysis model could be accepted or had a special meaning was called unidimensional as a new concept that had been tested base on factual and empirical data.

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