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An Overview of Microfinance Linkages in Indonesia

Topic :

Recognizing the particular richness of linkage arrangements available for study in Indonesia, the authors decided to conduct an overview study as part of the cross-country study of linkages implemented by the Food and Agriculture Organization (FAO) of the U.N. for the Ford Foundation.

This overview provides a descriptive mapping of different linkage models that exist in Indonesia, and reflects on Indonesia’s rich variety and wide range of financial institutions. The linkages are characterized by several small, regulated financial institutions engaging in chain relationships with major financial institutions and grassroots financial actors.

Indonesia also has special apex institutions set up to create linkages and linkages have an explicit role in a new ‘banking architecture’ being created by the central bank. Linkages are categorized based on a distinction between autonomous linkages and those occurring as the result of government or central bank initiative.

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