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Desa Pakraman and Lembaga Perkreditan Desa in Bali: A study of the relationship between customary governance, customary village development, economic development and LPD development

Lembaga Perkreditan Desa (LPD) is a network of savings-driven financial institutions regulated by provincial law in Bali which has evolved since 1985 solely based on local human and financial resources. It has two unique characteristics. First, being owned and governed by the customary village, it is fully integrated into Balinese culture. Second, it is universal and inclusive in outreach, with 1356 LPDs in 1433 customary villages and an average of 1.4 savings accounts and 0.4 loan accounts per Balinese family. Based on an analysis of case studies and secondary data, this study aims to deepen our understanding of the relationship between governance, institutional performance and economic development as a basis for designing strategies to strengthen smaller institutions and manage the risks of larger ones. Customary governance at village level is found to be their crucial strength, lack of effective supervision at province level a major weakness to be addressed.

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