Households, Financial Distress, and Predatory Lending: an Experimental Study

A substantial part of households and micro enterprises, particularly in developing countriesincluding Indonesia, did not have access to formal financial institutions which thenlead them to borrow money from illegal loan providers. Using an experimental study, wetested whether predatory loan, an illegal short-term loan with high interest rate, waspreferable or not by comparing with pawnshop loan, bank loan and household's limitedsaving when households confront with financial distress. We divided the participantsinto three groups: lower low, low, and upper low income. We found that predatory loanwas preferable especially for lower low and low income group. Result also confirmedthat even if the predatory loan charge was increased, the lower low- and low-incomegroups still prefer to ease their financial distress through predatory loans. Moreover, thelonger the duration of the predatory loan, the higher its probability to be chosen as afunding source in times of household financial distress

How Ready Are People for Cashless Society?

Financial technology could be an effective tool to achieve financial inclusion. However, it needed a certain level of readiness of society. In this paper, we investigated the determinants of readiness in the implementation of digital financial services which led to cashless society. We did a survey on 993 adults in a province in Indonesia using proportional sampling technique. Estimated using ordinary least square, our empirical results showed that readiness perception had high correlation with the quality of supporting infrastructure. By taking into account some demographic factors, we found that more educated and younger people had high spirit to adopt this system. Evidence showed that men were more enthusiastic in using such technological-based system. However, we did not find an evidence on the difference of readiness perception between those living in rural and those living urban areas. Teknologi keuangan dapat menjadi suatu alat yang efektif untuk mencapai inklusi keuangan. Namun, itu memerlukan tingkat kesiapan masyarakat yang cukup. Dalam paper ini, kami meneliti determinan dari kesiapan implementasi layanan keuangan digital yang mendorong pada masyarakat non-tunai. Kami melakukan survei pada 993 orang dewasa in suatu provinsi di Indonesia dengan menggunakan metode pengambilan sampel proporsional. Diestimasi menggunakan ordinary least square, hasil empiris kami menunjukkan bahwa persepsi kesiapan berkorelasi tinggi dengan kualitas dari infrastruktur pendukung. Dengan memasukkan beberapa faktor demografi, kami menemukan bahwa orang yang lebih teredukasi dan lebih muda bersemangat untuk mengadopsi sistem ini. Sedikit bukti ditemukan bahwa laki-laki lebih antusias untuk menggunakan sistem berbasis teknologi tersebut. Namun demikian, kami tidak menemukan bukti mengenai perbedaaan persepsi kesiapan antara mereka yang tinggal di daerah pedesaan dan perkotaan