An Analysis of Indonesian Farmer’s Financial Literacy

Abstract

The uncertainty of income earned by farmers, namely crop failure with a very high risk, will cause financial problems in their families. The target or respondents of this study are farmers who live in Lahat Regency, South Sumatera. Initial findings indicate that the level of financial inclusion of farmers in the Lahat Regency is still quite low. The purpose of this study is to analyze the level of farmers' financial literacy, identify the components of farmers' financial literacy, and analyze the factors that affect the level of farmers' financial literacy. The research method applied is descriptive analysis and multiple regression. The analysis showed that most of the literate farmers were in the moderately literate category of 47.2 percent and the least of the farmers in the less literate category was 24.5 percent. The financial attitude component gave the largest contribution to the farmers' financial literacy index, which was 0.73. Besides, the factor affecting the level of financial literacy of farmers is education. The policy implication resulting from this research is the existence of a structured promotion and training of financial literacy for farmers by local governments. In addition, campaigning for the importance of being educated and inviting educated people to start running agricultural business activities.

Financial literacy and its antecedents amongst the farmers: evidence from India

“…Widhiyanto et al (2018) reported a moderate level of FL amongst the Indonesian farmers and age, education, distance to the national capital, income, bank account, and financial education were noted as the important factors affecting the level of FL. Such a moderate level of FL was also observed by Santoso et al (2020) and Safitri (2021) in respect of Indonesian farmers. Lakkanawanit and Dungtripop (2018) also showed that age, education and practice of book keeping were found to exert a significant positive effect on the moderate level of FL amongst the rice growers in the PakPanang basin of Thailand.…”

“…Such a moderate level of FL was also observed by Santoso et al. (2020) and Safitri (2021) in respect of Indonesian farmers. Lakkanawanit and Dungtripop (2018) also showed that age, education and practice of book keeping were found to exert a significant positive effect on the moderate level of FL amongst the rice growers in the PakPanang basin of Thailand.…”

“…Handful studies have been carried out to ascertain the state of FL and associated contributing factors amongst the farmers in Ghana (Akoto et al, 2017;Twumasi et al, 2021), Indonesia (Widhiyanto et al, 2018;Santoso et al, 2020;Safitri, 2021) and Thailand (Lakkanawanit and Dungtripop, 2018). Akoto et al (2017) showed the prevalence of low level of FL amongst the cocoa farmers in Ghana.…”

“…, 2018; Santoso et al. , 2020; Safitri, 2021) and Thailand (Lakkanawanit and Dungtripop, 2018). Akoto et al.…”

Farmer's financial literacy and its determinants: evidence from South Asia

“…Akoto et al (2017) and Twumasi et al (2021) observed the prevalence of poor FL (affected by age, economic status, educational attainment, gender, risk tolerance and viewership of FL television programmes) amongst Ghanaian farmers. On the other hand, Widhiyanto et al (2018), Santoso et al (2020) and Safitri (2021) noticed that the moderate FL amongst the Indonesian farmers geting affected by age, educational attainment, level of income, financial inclusion (FI) and FL training. Similarly, Lakkanawanit and Dungtripop (2018) also noticed a moderate level of FL (affected by age, education and habit of practicing book-keeping) amongst the rice cultivators of Thailand.…”