Micro-credit as catalyst for improving rural livelihoods through agribusiness sector in Indonesia
PurposeThis paper aims to analyse a simultaneous role of micro-credit in intensive farming to improve rural prosperity and to determine factors affecting farmers to access micro-credit and to adopt technologies.Design/methodology/approachThis paper uses a concept of technological change as the underlying theory. The analysis is conducted using structural equation modelling based on data compiled from a survey that interviewed 220 of farm-households. Samples of the study were randomly selected from chili farming community in three regions of Java in 2013-2014.FindingsThe results show that micro-credit provides positive direct and indirect impacts on rural prosperity. The indirect effect of micro-credit was due to a mediation of technology adoption. Farmers’ personalities and agribusiness environment determined farmers’ decision to access micro-credit and to adopt the technology.Practical implicationPolicymakers should introduce more advanced technology and provide credit facilities at the same time to ensure technology adoption and welfare improvement of the community.Originality/valueUsing structural equation modelling enables analysis of simultaneous regression models. Along with technology here, micro-credit played roles as catalyst and reagent in improving rural livelihood.