Microcredit and technology adoption: Sustained pathways to improve farmers’ prosperity in Indonesia
ISSN: 0002-1466
Article publication date: 18 September 2018
Issue publication date: 14 January 2019
Abstract
Purpose
The purpose of this paper is to analyze the impact of microcredit and agronomic technology on farm households’ prosperity, and to determine important factors affecting farmers’ access to microcredit and technology adoption in Indonesian intensive farming.
Design/methodology/approach
The focus of the study was farmers engaging with chili-based agribusiness in rural areas. Data for this study were compiled from a survey that interviewed 250 farm households. Samples of the study were randomly selected from chili farming community in three regions of Java during 2013–2014. Data were analyzed using structural equation modeling (SEM).
Findings
Microcredit provided positive direct and indirect impacts on household prosperity. Microcredit indirectly impacted the well-being through the mediation of technology adoption. Farmers’ characteristics and agribusiness environment determined farmers’ decision to access microcredit and adopt advanced technology. Microcredit and technology have enhanced farmers’ well-being through pathways that enabled farmers to develop farming scale.
Practical implications
The government should offer more alternatives to advanced technology and flexible procedures of access to credit at the same time to ensure sustained pathways of rural economic growth in Indonesia.
Originality/value
This paper applied a SEM to a proposition of simultaneous causal interrelations among microcredit, technology and farmers’ prosperity.
Keywords
Acknowledgements
The author thanks the farmers who kindly provided their time to give information on crop production practices, and research assistants and enumerators, as well as Professor Calum G. Turvey and two anonymous referees for helpful comments and suggestions. The data used in this study are a part of research project funded by The Indonesia Project of Crawford School ANU – SMERU research grant. The author is responsible for interpretations, any shortcomings and errors.
Citation
Mariyono, J. (2019), "Microcredit and technology adoption: Sustained pathways to improve farmers’ prosperity in Indonesia", Agricultural Finance Review, Vol. 79 No. 1, pp. 85-106. https://doi.org/10.1108/AFR-05-2017-0033
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited