Culture-Oriented Credit Management in Rural Bank as the Driving Factor in Creating Financial Inclusion (Survey in Rural Banks in West Sumatera Province)

Abstract

This paper shows the empirical evidence about the implementation of local culture in credit management in Rural Banks. This paper is the result of a survey in three districts in West Sumatera Province which were chosen purposively. Sampling areas include Agam district, Lima Puluh Kota district and Tanah Datar district. The reason for choosing these three districts as a research area is because of the similarity of socio-demographic conditions and most of the Rural Banks are in this region. There were 38 Rural Banks  taken as the unit of analysis in this research. This study reveals that the breadth of  outreach varies according to the type of local cultured applied in credit management.  Some of the policies include 1) Local cultured-based products and local culture-based services, 2) Involvement of customary or religious leaders, 3) Non-Traditional Collateral, 4) Prioritizing local people as marketing personnel and 5) Credit Assistance Services. Furthermore, this study recommends several policies which have proven to be able to expand  the outreach and creating  financial inclusion  in rural areas, its covering involvement of customary / religious figures as mediator, prioritizing local people as personnel marketing and credit assistance services.