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Digital Finance and Microfinance Risk Level

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Digital Finance is the government's solution to save the economy's future and accelerate economic recovery. Microfinance institutions (MFIs) can survive by leveraging technology to achieve large-scale operations and services because of cost-effective technology solutions that meet their data management and customer needs. The study examines the impact of digital finance on MFIs' risk level using two indexes, namely the supply side index and the demand side index. The supply side index (access) measured by FINTECH_A indicates the number of e-money accounts and Accumulated Creditors. Meanwhile, the demand side index (Usage), namely FINTECH_B, includes two indicators volume of digital money transactions and the value of digital transactions. We used the Z-score as a proxy MFIs' risk-taking, which indicates financial stability. The research sample is Microfinance Institutions registered with the Indonesian Financial Service Authority (OJK), totaling 227 conventional and sharia Microfinance units. The data were analyzed descriptively, and the panel data regression was used for testing the hypotheses. We also did a robustness check to test the strength of the research model. The results showed that the supply side index significantly affects the microfinance risk level. It means that the accumulated number of Creditors and the number of accounts could lead to a high level of MFIs risk that occurs from bad credit. The finding implies that microfinance should manage its digital finance policy well through the continuing analysis of the value of the Z-score.

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Informasi Detail

Penerbit

Selangor, Malaysia : Universiti Islam Selangor (KUIS) Malaysia., 2023

Bahasa

English

ISBN/ISSN

2756-8938

Edisi

ICoMM 2023

Lampiran Berkas

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