Critical Factors That Determine Credit Approval to Micro, Small, and Medium Enterprises (MSME) IN BEKASI

Abstract

Many business owners attempt to apply for bank credit, but not all of them are approved. This study aims to reveal the factors determining credit approval to Micro, Small, and Medium Enterprises (MSME). The variables used in this study are the owner's capital, company establishment, collateral value, credit amount, owner's age, and good relationship with the bank. In this study, the logit model used as a technique of analysis, in which there is only one dependent variable in the form of dummy along with the other six independent variables. The statistical test reveals that simultaneously all independent variables have significant effects on credit approval. Partially, only the owner's capital and good relationships with the bank do affect the approval. Therefore, business owners should pay more attention to their amount of capital and interrelation with the bank when applying for bank credit.Abstrak. Banyak pemilik usaha berupaya untuk mengajukan kredit kepada bank, namun tidak semua pengajuan tersebut disetujui. Penelitian ini berusaha untuk mengungkapkan faktor-faktor yang menentukan persetujuan pembeian kredit kepada Usaha Mikro, Kecil, dan Menengah (UMKM). Variabel-variabel yang digunakan adalah modal pemilik, lama berdirinya usaha, nilai jaminan, jumlah kredit, usia pemilik, dan hubungan baik dengan pihak bank. Di dalam penelitian ini, digunakan model logit yang mana hanya terdapat satu variabel dependen dalam bentuk dummy bersama dengan enam variabel independen lainnya. Hasil pengujian statistik mengungkapkan bahwa secara simultan seluruh variabel independen memiliki pengaruh yang signifikan terhadap persetujuan pemberian kredit. Secara parsial hanyalah modal pemilik dan hubungan baik dengan pihak bank yang menentukan persetujuan pemberian kredit tersebut. Oleh karena itu, para pemilik usaha perlu memberikan perhatian lebih kepada besarnya modal yang dimiliki dan hubungan baik yang terjalin dengan pihak bank ketika mengajukan kredit kepada bank.

THE EFFECT OF MSME’s FINANCIAL STATEMENTS QUALITY TO BANKING CREDIT ACCESSIBILITY

“…The results of this study are consistent with research conducted by Sarwani et al (2019) andSiswanto, Arifin, &Cavin (2019) which stated that there was a positive and significant effect between credit collaterals and the amount of credit received. However, the results of this study were not in line with research conducted by Bebczuk (2004) which stated that collaterals credit standing has no significant effect on the amount of loans disbursed.…”

“…H3 = Business duration has a positive effect on access to bank credit. According to Siswanto, Arifin, & Cavin (2019) in their analysis of the important factors that determine credit approval for Micro, Small and Medium Enterprises that the value of collateral owned by a prospective debtor can affect the realization of loans provided by banks. When a debtor is declared bankrupt and cannot repay the debt, the debtor's collateral assets will be executed, and the value will be used to repay the debt.…”

How Far Has Our MSMEs Credit Underwriting Assessment in Indonesian Commercial Banks Progressed?

“…Capital is also an important part, as investment or working capital financing cannot rely only on debt financing, and it substantially impacts the likelihood of MSME credit approval (Siswanto et al, 2019). The bank will assess key financial ratios from the (in MSMEs cases primarily using pro-forma financial statement) balance sheet of the firm and keep the given total limit of credit to equity ratio under the bank's risk appetite.…”

Credit Evaluation by the Small-Medium Sized Enterprises: Maqasid Shariah Approach

“…The last element of CAMPARI is insurance, also known as security, which is a mechanism to secure lender's position in case the borrower fails to meet the financial obligations (Brown and Moles, 2014). The value of the available securities can significantly affect the lending decision, especially if the securities are legally owned by the borrower, which is easy for lenders to monetize the securities for repayment purpose (Siswanto, Arifin and Cavin, 2019).…”