Analysis of Joint Liability Groups’ Performance Using Social Cohesion Approach to Sharia Savings and Loans Cooperatives in Indonesia

Abstract

This study intentions to discover whether social cohesion significantly affects the performance of joint liability (tanggung renteng or TR) groups in sharia savings and loans cooperatives in Indonesia. The social cohesion dimension in this research includes peer selection and monitoring, peer sanctions, and social ties. Meanwhile, the TR group performance dimension is analyzed based on its ability to overcome moral hazards. This investigation adopts the quantitative method design. Focusing on the population of sharia savings and loan cooperatives, particularly in Java, surveys are distributed to their members to collect data. The data were evaluated quantitatively using PLS-SEM. The results show that peer selection and monitoring, and social ties have no impact on moral hazard behavior that measures TR group performance. In fact, social ties have a strong influence on the process of peer screening and monitoring. On the other hand, peer sanctions significantly positively impact moral hazard behavior. It is because the members of the observed TR groups cannot apply sanctions decisively and then trigger freeriding and strategic defaults in the group. There have not been many studies on TR groups in Indonesia that involve the social cohesion dimension in sharia-based cooperatives. This research can provide more in-depth knowledge about how the performance of TR groups in Indonesia is influenced by the level of social cohesion owned by sharia cooperative members.

Pearls Analysis and Efforts to Improve Financial Performance in KSP Kopkardios Ruteng

“…In this case, financial performance is a measuring tool for whether or not a business is a good cooperative, it is necessary to analyze financial performance in making the right and important decisions as a reference and guideline for savings and loan cooperatives. (Apriyati, 2023) Financial performance is the achievement of company achievements in a period that describes the condition of the institution's financial health. The company's financial performance can be measured from the financial reports issued by the institution periodically or periodically which provide an overview of the financial position of an institution.…”