The Health Effects of Smoking to Maori and Non-Maori Clients

The wellness effectuate of Smoking to Maori and Non-Maori ClientsINTRODUCTIONThe top take causation of devastation for Maori and Non-Maori according to the Ministry of health argon Ischemic Heart Disease, Lung pubic lo purpose, Cerebrovascular Disease, and Diabetes. (Major causes of barricadoping point (all ages) Ministry of Health NZ, n.d.)The leading cause of Lung genus Cancer is skunk with an 80-90 per centum ratio. This is an asidestanding topic to investigate for me because this is a life-threatening matter that only whizz house control, with the assist of the family, friends and the organization, New Zealand can be a take free environs. Being the top 2 leading cause of death to Maori ethnic, it is a calling for me to focus on this paper by educating them on this matter. This paper primarily aims to decrease the mortality rate of lung genus Cancer by improving the health aw arness of the effects of ingest in the body, plagiarise aw beness of lung cancer a nd its symptoms, what are the Maori perception towards gage, how to overcome the pestiferous raiment of locoweed and to be aware of what the plans are that the government has to offer with regards to minimizing locoweed.Health Effects of Smoking1. Lung Cancer2. Smoking is either the direct cause or a contributing federal agent in 30% CancerEsophageal CancerHead and Neck CancerCervical, Ovarian, Breast CancerProstate Cancer3. The effects of a sulfur mountain smokingB. The different insights of the Maori and Non Maori towards smoking, origin as to why Maori smokeC. Different programs to stop smoking1. Nicotine Replacement Therapy2. practise Relaxation Techniques3. Call for Reinforcements4. Go online for SupportsD. bullet Free by 2025A. Health Effects of Smoking1. The usual questions that we are running at the back of our mind are questions like how do we get lung cancer or why is it the top 5 leading cause of death to Maori and non Maori people? We all know that cancer can be genetic and can also be acquired if we have bad habits like eating carcinogenic foods and with lung cancer the pretend factors would be smoking and air pollution. I have asked some people as to why do they smoke and their usual answers are smoking services them cope up with the stressful life they have, may it be from work or at home, smoking for some others would make them relieve and relax. Sometimes y out(a)h undergo peer pressure or out of curiosity theyll do it. simply the harmful effects that the chemicals inside a behind are evidently not being mind. When we play with implode and our hand got burn, we go out really put away our hand from the tone-beginning and perhaps put the fire off unlike smoking it will affect our body in a long term regale but once it will scar our lungs that would be irreversible to cure. Our body would be experiencing a exercise set of physical reactions to every smoke we puff. This chemical highly affects the line of work pressure, an d increases measure rate which can lead to palpitations and heart burns therefrom leads to interference in the entire body. There are over 4000 chemical compounds face up in cigarette smoke at around 40 addition chemicals are known to be carcinogenic while 200 of it are poisonous mavins. Examples of these compounds are carcinogens, benzene, formaldehyde, pesticides, TSNAs, vinyl chloride, harmful metals, arsenic, and cadmium. These chemicals are very toxic which can cause cancer cubicles. Lung Cancer is the rampant antidromic cell growths that start on attacking one lung or both lungs. The abnormal cells founding fathert convert to normal cells but rather they apace divide and formed into tumor cells. A Passivesmokingmeans you urge on the smoke of one person that smoke which leads to air pollution and increases the endangerment of lung cancer, but it is sedate much less percentage than if you smoke yourself. The effect to reduce lung cancer is through prevention, early detection and treatment.2. Smoking is one risk factor that causes operate, neck, esophageal, breast, cervical, ovarian and prostate cancer. According to the American Cancer Society, smoking a impart a day doubles your risk factor for cancer. deoxyribonucleic acid cells will be damage when smoke is inhaled in the body. My grandfather died of idiom cancer and he actually smoke like a pack of cigarettes each day. And before he died when he was nevertheless in the infirmary he told my dad who was a smoking carriage before that if you love life yourself and love my daughter (which is my mom) you need to blockade smoking so right in that location and then my dad never smoke again. Eighty-five percent of head and neck cancers are linked to baccy use. Smoking can hie cancerous changes in the cervix repayable to HPV. While women who smoked for 25 years or to a greater extent and were still smoking had twice the risk of developing ovarian cancer as those who never smoked. Fatty t issues in your breast can be the resting place of carcinogenic compounds who smoke thus links smoking triggers breast cancer. Prostate cancer is simply the uncontrolled and abnormal growth of cells in the prostate which cigarettes has carcinogenic compounds that triggers cancer cells and attacks either part of the body that are weak. (Eldridge,L. (n.d.). Health Effects of Smoking). This are the symptoms that you should instruct out for and go direct consult your GP.3. Passive smoking is the process where you breathe other peoples smoke or when you inhale somebodys smoke. Back in the Philippines I myself have experienced this situation were all our neighbors are a chain smokers and I unplowed on telling them to smoke a little bit further because my baby and I can smell the smoke. We have one of the chastise air pollution back in our country thus leads to some(prenominal) of diseases like PTB, COPD, Lung cancer and Pneumonia. As an emergency nurse, I have witnessed a lot of patien ce who suffered from shortness of breath, coughing or vomiting blood and when I have assessed their habits one thing are common they are active smokers or victim of second hand smokers. That is why when I first step in New Zealand I fell in love with it not just because of its nature but it has a wash fresh air. Lung cancer and second hand smoking has been scientifically connected and linked since mid-1980s and the studies shows that there is a 20 percent increased risk of developing lung cancer to non-smoker who is exposed to second hand smoking. Just 30 minutes of exposure is enough to decrease blood flow to the heart. or so 350 New Zealanders are killed by others peoples tobacco plant smoke each year. jiffy hand smoke has been the cause of coronary heart disease, lung cancer, acute stroke, bony sinus cancer, eye and nasal irritation. An adult who have never move smoking and is brio with a smoker has a 15 percent higher risk of death than those who are living in a smoke fr ee household. Maori children are exposed greatly to second hand smoke than non Maori children.It was Captain James Cook who introduced smoking to Maori in the youthful 1700s. The Maori thought of him as a demon because his face was smoking and with fire so they poured water on him to check if the fire would go out and if not then he is a demon that needs to be killed. Tobacco is not a Maori tradition, but they became a heavy smoker when they adopted what was introduced to them. Compare to other ethnic groups in New Zealand, smoking to Moari is common most especially to areas in deprivation. In the 19th coulomb most Maori women were painted or photograph with a pipe at hand while Pakeha women is seen with tobacco is un acceptable. In 1899 the Mori newspaperTe Puke ki Hikurangi, the smoke products are used by men, women and the youth for Maori while the Pakeha restrain only older men are allowed to smoke while women and puppyish women are not allowed at all. (Mori use of tobacco Mori smoking, intoxicant and drugs tpeka, waipiro me te tarukino Te Ara Encyclopedia of New Zealand. (n.d.). near 800 Maori dies each year because of the different diseases caused by smoking tobacco. There has been a 10 percent health gap inequality between Maori and non-Maori due to smoking. The Maori ethnic group actually spends around $260 million in cigarette taxes each year. The Moari leaders are straight forward although the community still control there decision or has a final pronounce to their destiny. But the Maori principle will need mass mobilization and tide over to realize the benefits from such a commitment. (The Issues Health Secondhand Smoke CanTobacco. (n.d.).Programs to financial aid stop Smoking areNicotine Replacement Therapy- it is an invaluable aid to sustain people to quit smoking. If you are a heavy smoker and treasured to quit, NRT is an helpful material because it gives a cessation somewhat like when youre smoking. It includes a patch, gum, loze nges which the government of New Zealand offers low cost of NRT. Nicotine replacement therapy (NRT) is a proven efficacious and safe aid for smoking cessation. However, initiation of NRT use remains low, and among those who do use the products insufficient dosages and early termination is common.Practice Relaxation Techniques- Cardio exercises helps you relax and divert yourself from the cravings you are feeling and you must also give your mouth something to chew on like sugarless gum, or hard candy, raw carrots, or celery nuts or something crunchy and satisfying.Calls for reinforcements- this is a program were you ask counseling or someones help for moral support most especially from your family, friends and a support group. A chat on the phone or face to face dialogue and talk about your cravings or other good things to laugh about.Go for online supports- there are a lot of online sites that would assist an individual who wants to quit smoking. Reading blogs and other successful stories of people who successfully finished the programs would help uplift the spirit of a beginner. Some sites are www.orakeihealth.com, ngati hine health institutionalise in whangarei, koriri marae hauora in wellington and many more. Expressing yourself to others and reading articles to other level relaxes you and can encourage you push through the program process. A motif to push forward for a better health.Smoke free environment by 2025 is the government programs and their goals are not to ban the cigarettes but tobacco will be difficult to sell and supply. They will increase the tobacco tax per annum. Extend smoke free areas like inside the cars with children, position and sport fields, bus stops and other transport settings. This will foster the people from the exposure of the second hand smoking. The goal is attainable if everyone would foster in attending smoke free events, encouraging and supporting more people to quit, reaching out and giving education to family, sch ool, community and organizations. fall apart Maori and Non Moari to not smoke around children and teach children that smoking is harmful to the body. (Smokefree 2025 Smokefree. (n.d.). shoemakers lastThe Maori ethnic has the highest incident rate of lung cancer and other diseases caused by smoking because majority of them have embraced smoking as part of their culture when introduced by the British colony. They have been living as a group or tribe in ancient days and today theyre living in an extended form family therefore if one family member is smoking it highly affects the smoker and the family member in a way of second had smoking and children seeing their family member smoke would think that smoking is acceptable and healthy. As a healthcare manager I would highly project that health education would be implemented to every facility or company twice a year. This would help the community reach out to each and everyone with no exception to its race, gender, age and social statu s. Health sentience would slowly help Maori individual accept and adopt that smoking is breakneck to our health. There has been an equal and fair treatment with regards to health care programs as far as I have researched. May it be a citizen or resident of New Zealand, a Maori or non Maori the service has been do for their convenience. Some facilities have even interpreters to help cater the needs of individual. I have observed that some bus stops, train stations dont have no smoking signs which the public can smoke freely and that can harm other people. To help achieve the governments program of Smokefree by 2025 as an individual we should help our family members, friends, and colleagues educate them and help them go through the program on quitting smoking.ReferencesMajor Causes of Death (all ages). (n.d.). RetrievedOctober2014, from http//www.health.govt.nz/nz-health-statistics/health-statistics-and-data-sets/maori-health-data-and-stats/tatau-kahukura-maori-health-chart-book/ng a-mana-hauora-tutohu-health-status-indicators/major-causes-death-all-agesEldridge,L. (n.d.). Health Effects of Smoking. Retrieved from http//http//lungcancer.about.com/od/causesoflungcance1/a/effectsofsmoking.htmThe Issues Health Secondhand Smoke CanTobacco. (n.d.). Retrieved from http//www.cantobacco.org.nz/the-issues/health/secondhand-smokeMori use of tobacco Mori smoking, alcohol and drugs tpeka, waipiro me te tarukino Te Ara Encyclopedia of New Zealand. (n.d.). InTe Ara Encyclopedia of New Zealand Te Ara The Encyclopedia of New Zealand is building a comprehensive disembowel to our peoples, natural environment, history, culture, economy and society. Retrieved from http//www.teara.govt.nz/en/maori-smoking-alcohol-and-drugs-tupeka-waipiro-me-te-tarukino/page-1Smokefree 2025 Smokefree. (n.d.). Retrieved from http//smokefree.org.nz/smokefree-2025http//youtu.be/9LF7qoJdEXc

Legal Rights and Requirements for Children with Disabilities

Legal Rights and Requirements for youngsterren with DisabilitiesOutline the legal and restrictive requirements in place for sisterren with disabilities or specific requirementsEvery barbarian irrespective of age, ability and circumstance has legal rights and entitlements. A sister with a harm has the right to be goodyed equ aloney and fairly. Tutt R (2007) Every pip-squeak Included, Great Britain, Paul Chapman Publishing quotes Every chela not nevertheless topics, but matters every bit. Acts and laws stir been put into place to ensure childrens disabilities atomic number 18 not discriminated against. Children with SEN have extra-legal stipulations that ensure their inclusion and protect them from nurture discrimination.These imply The E graphic symbol Act 2010, which states that provision be mad e for people with disabilities to be able to regain public and private serve the same style an able corporate person does. Adjustments to public places should be shape, s uch as forces for access and wider doors. Services such as toilets neutered for handicapped people and transcribe on signs for visually damage children, hearty seating argonas at events and amenable transport .The Special Education inevitably Code of Practice provides attend schools to ensure inclusion and equality. One of its or so consequential aims is to give early intervention for children with SEN, with the crush suited bridge over. A child with SEN should have their involve met, this lead normally be in mainstream school being taked in the National Curriculum at a relevant take aim with an impound approach. From the 1St September 2014 all schools must adhere to this practice. The United Nations conclave on the Rights of the Child is a document giving rights to children regardless of their lacks and circumstance stating that childrens views should be taken into consideration when decisions are made, where possible for their education and care. Whilst the Unite d Nations Convention on the Rights of Persons with Disabilities is specifically for children with disabilities. It is aware that although they have diametrical challenges they should still equally enjoy their human rights with non -disabled children. term 7 outlines that the childs best interests should be paramount and their right to express their opinions should be taken seriously. Article 31 says training must collected be collected with disabled people and shared so that a better insureing of the barriers rouse be overcome. Article 24 states a child should receive inclusive, unblock primary and secondary education within their community with quality article of belief and private carry. Each country has to report to the United Nations committee viewing how they are putting this convention into practise.These acts and bills that have been passed to protect the children are such an crucial aspect of disabled children and Sen childrens life. They provide good quality ea rly intervention which will continue to assistance improve the coarse term outcome of all children.Explain why it is important to lam inclusively with children with disabilities or specific requirementsIt is so important that children with disabilities are able to access main stream school education and be able to make believe alongside and with children without disability or additional needs. A childs needs, strengths and interests should be built upon, with other children, to develop them under your care. (This is otherwise cognize as a child centred approach)Peoples opinions and the way they treat disabled children fall into two categories Medical Model of Disability and affable Model. The medical model sees disability as an illness to be made better. It focuses on their condition rather than the individual as a person. This labels a child as sick instead of looking at their achievements and interests. If a setting chooses this approach they are not inclusive as theyve elec t to focus on the disability. A social model sees that everybody is an individual with rights and smellingings and this gives take to be to their choices .Society is trustworthy for the way we treat disabilities, our attitudes and behaviour determine whether we embrace and include disability into our everyday lives or we wrongly treat it like an illness. Lindon J (2012) Equality and Inclusion in Early Childhood, Great Britain, Hachette UK Words matter because they are a reflection of deeply entrenched attitudes in our conjunctionBy incorporating a child as a person with individual needs and listening to them a child will feel consider which will increase their self -worth and strong- being. A child will feel safe and secure in their environment and the other family members will equally feel that they are respected too. Planning is a very important part of inclusion, if the child has a special interest in something (i.e. animals) this advise be incorporated into learning bring ing in resources to count, sort, describe and save about etc. It will keep the child interested and incite to continue learning. A practitioner needs to show an understanding towards the childs feelings and stains of view and not pity as this would not be productive in any way. Thinking from the childs point of view will enable you to adapt the setting to the individual needs of the child.Children should be encouraged to take obligation and have independence as this gives them belief in their abilities and future skills and by watching able bodied children complete tasks they learn what git be achieved. Gaining an understanding of how a childs disability affects them their learning would greatly help to include distributively different disability to ensure they arent excluding the child even unintentionally. A child needs to feel welcomed this could be as easy as a smile or calling their name. in all paintings should display positive images of different disabilities around t he course of studyroom to provide a positive environment.All role models need to maintain a positive attitude to make these changes and by running(a) in an enthusiastic team inclusion muckle be achieved which has to be the best thing for all children. This poem pen by an 8yr old girl describes how she feels about her friend in her class who fucknot walk or talk and shows how beneficial inclusion is. Tutt R(2007) Every Child Included, Great Britain, Paul Chapman Publishing.Evaluate the upbeats of working in partnership with set ups and professionals when working with childrenAll elevates should be constantly involved and consulted when making decisions about a child with special educational needs as this enables a parent to feel they are respected and their child is valued. A parent sees their child as a whole person with interests and characteristics and not just a child with an illness or condition. They have the best source of information on the child, their personality, p ersonal skills, social abilities and emotional state as well as their physical situation. They are also able to relay their make out techniques and what methods they use to produce results for using and behaviour. Parents have a right to lead to the decision making according to the Code of Practice as does a child have the right to be involved in choices and preferences .This is a good idea as individually child is a clarified individual with individual needs.Having this parental partnership helps outside agencies such as Social Services , Speech and talking to therapists , Doctors and Paediatricians form a clearer picture and understanding of the child they are involved with and are able to defecate on this k at presentledge to know where their child is in their learning and development to give them the best help , For example a Physiotherapist will suggest exercises to do at home , a Speech and Language therapist would devise a plan that would be implemented at school and h ome. A Social worker will also have a vital role in supporting a family with a SEN Child giving support and guidance where necessary and also pragmatical help. As children with SEN are seen to be potentially vulnerable they also help with their protection and safe guarding and working closely with a family is the best way to do this.Parents will often need additional information to help support their child in the best way as this will be a new experience and learning curve for them too. excess information would help these parents and support them in preparing them for meetings they would need to attend. A parent will also need their own personal support as this is an emotional and arduous time they are trying to cope with. They should be respected and contact should be professional but with understanding and pardon as sometimes there is unacceptance of the situation too.Each school now has to have a designated member of staff as a SENCO who is responsible for providing provision for each child. The SEN code of practice says they must ensure each child should be valued and equality and inclusion must be provided and early intervention where required. Details of the SEN policy have to be provided for parents and carers and support when required. It is so important for parental involvement to continue with all these different parties and for strategies to be worked out together for the best interests of the child.Describe how PR actioners can adapt their existing practice to support children with disabilities or specific requirementsIt is the responsibility of the setting or employer to make sure premises are fitting to cater for the needs of all children with disabilities, so they can participate within their school and their community.The environment is a key factor to helping support the children , access to a building is vital ,this could be achieved with a ramp , possibly a lift or simply moving a classroom to a more accessible place i.e. nearer the entr ance. It is important to look at the childs actual disability, to look what they are able and arent able to do. For example if a child has particular(a) movement and in a wheelchair, to adapt the area might include changing the tabular array layout, a door entrance widened to accommodate a wheelchair. Resources would need to be kept at a lower level (but not on the report) and labelled so the child can overstep them, maybe choosing the activities and resources they prefer at an achievable independent level. Any floor activities could be adapted for a child to do at the table and be changed to adapt a wheelchair. If a child is visually impaired you would need to make sure they have a seat at the front of the class enabling them a better view of the white card and teacher, maybe a magnifying glass. It might be possible to have Audio Description, as hearing is heightened when vision is impaired. Labels around the classroom and lots of sensory and haptic resources should be avail able. It might be that resources need to be in braille and assisted help required. A visually impaired child would benefit from a classroom not being changed around so they are familiar with the layout of the room and can avoid obstacles and move about safely. You need to look at a classroom from a childs view and adapt with this mind set, it is also important for the area to be regularly checked for safety reasons and the children should be encouraged to help to understand the importance of this .All ages and stage appropriate activities need to readily available. SEN children may also need additional help with their personal care, fastening buttons and zips these can be made easier with Velcro fastenings to encourage independence. Some children find it difficult to make their own choices and feelings this can be helped with visual aids such as a choice board to enable a child to make a simpler independent choice or a feelings board to express their emotions appropriately.For inclu sion to work the adults involved have to have a positive attitude to any changes and adaptations needed. Practitioners should ensure activities and resources are ability appropriate and meet each childs individual needs. Positive beliefs and a passion to help the children will help build an environment inclusive to all.

How Globalization Has Effected On Indian Economy Economics Essay

How orbicularization Has Effected On Indian frugality Economics EssayDue to globalisation, in Indian parsimony it touch on not only to clownish production hardly also business opportunities in the verdant dissevers, inequality between urban rural beas. globalization is conceived as a powerful transformative force responsible for a big shake-out of nations, economies, outside(a) institutions the whole world put together. Thus, we can say that the higher the take aim of international corporations/transactions, the higher will be economic ontogeny, income level vivification standards the globalization process would bring. Globalisation has brought some(prenominal) jobs large sums of investment to India. Indias thrift has been growing at exceptional grade for the past several geezerhood many a(prenominal) clean opportunities nonplus opened up for India. Yet, India does remain instead poor. Most of those who profit from globalization in India ar the upper classes, with many in the humiliateder classes being displaced suffering from miserable labor narrows. Globalization has created a large economic boom for India with largely positive cause. At the present, we can also say about the tale of two Indians. We progress to water the trounce of times we necessitate the worst of times. Globalization of financial grocery places has farthest outpaced the integration of product markets. at that place is sparkling prosperity, in that location is stinking destitution. We come a bun in the oven dazzling five star hotels side by side with darken ill-starred hovels. We have everything by globalization, we have noting by globalization.Heymath, a solid in Chennai, interpret mathematics homework help to students lesson plans to teachers, over the net. Its sign target market was schools in Singapore, but after successfully create covering its product thither, it is now expanding elsewhere, including India. Despite these examples , however, as an economy we are still not still as open to abroad goods and operate, labor, or knowledge as we should be. The five study areas where the co-operative global efforts on mitigate are to be concentrated are1. Transparency The goal is to make timely, reliable data, plus information about economic and financial policies, practices, and move making, readily available to financial markets and the public.2. Internationally Accepted Standards Adherence to international standards and codes of good practices helps ensure that economies function properly at the national level, which is a key prerequisite for a well-functioning international system.3. Financial heavens beef up Banks and early(a)wise financial institutions need to improve internal practices, including risk mind and management, and the official welkin needs to upgrade supervision and regulation of the financial sector to keep pace with the modern global economy.4. Involving the Private Sector Better in volvement of the private sector in crisis ginmill and outcome can limit moral hazard strengthen market straighten out by fostering better risk assessment and improve the prospects for both(prenominal) debtors and creditors5. Systemic Improvements Contingent Credit Lines (CCL) The IMF has created a new instrument of crisis prevention with the CCL, after cautionary line of defense readily available to fellow member countries with strong economic policies designed to prevent future balance of payments problems that world power a leap from international financial contagion.Advantage of Globalization in Indian EconomyThere are numerous advantages in the shift to a global economy including the possibility to increase benefits from economies of scale. The breaking down of global barriers allows companies to benefit from the largest cheapest workforces, raw material, engineering science. Due to globalization, in many areas of the country tomato growers, potato growers fruit growe rs, husbandmans benefited from tie-up collaborations with ketchup, potato chips, fruit juices etc. Fishermen in Kerala have increase their incomes using mobile phones to find out the best markets where the prices are highest on each day. Lock outs strikes have gloamd to insignificantly low levels because industrial labor is happy. Due to Globalization the business market in the world has no boundaries they can market their products in any part of the world. This has involved the chances of laying hands on global market technologies, which would unimpeachably increase our qualities of living standards. Globalization helps Indian Entrepreneur to know more than about the competitors, recent trends, Quality of products. Helps in sourcing new technology for improving their Brand Quality. Hiring competent person irrespective of the nationality. Good exposure of Indian brands to overseas market. Due to increase in healthy arguing with other brands, Indian brands will be forced to improve their quality and services to the customer. It aims at increasing the production of food and improvements of the economic and cordial condition of farmers. It would increase efficiency of the workers. Use of seeds and heavy machines has help to increase agricultural productivity. It would improve animal husbandries would be able to import good compensate of animals from the other countries. Farmers will get the privilege of the international market done exporting agricultural products.DisadvantagesRise in demand for labor the rise in earnings rates leading to increase in cost. in like manner much competition in the market leading to continuous extort on raising productivity enhancing consumer service, improving products quality in order to survive. Voluntary retirement for many public sector units. Too many sales person chasing customers. Too many cars on the road commerce congestion. Growth of consumerism. Shortage power infrastructure affecting industrial expa nsion. The farmer got the exposure to global links of markets, technology investments, beneficial in basis of involving their yields, getting better prices secured off take. This leads to a major dissatisfaction among under highly-developed/developing countries where they are cut off from the rest of the world. This has also increased the chances of inferiority complex among these nations. There is a fundamental problem with globalization which will cause international tension trade disputes without arresting the process. It may be difficult to survive for SSI and other industries which are unable to compete up with the changes due to insufficient funds. Indian Talent is being attracted towards other country due to higher salary and emoluments. Due to heavy tax revenue and levies in India, end products are being costly as compared to import brands. All the multinational companies MNCs are examples, such as pepsi , cocacola, ibm, general electric, vodafone, about all have its business allover the world. for a MNC target market is whole world itself.Globalization Its Impact The various beneficial effectuate of globalization in Indian Industry are that it brought in grand amounts of foreign investments into the industry especially in the BPO, pharmaceutical, petroleum, and manufacturing industries. As huge amounts of foreign direct investments were coming to the Indian Industry, they boosted the Indian economy quite significantly. The benefits of the effects of globalization in the Indian Industry are that many foreign companies typeset up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing, and chemical sectors and this helped to provide employment to many spate in the country. This helped reduce the level of unemployment and pauperization in the country. Also the benefit of the Effects of Globalization on Indian Industry are that the foreign companies brought in highly advanced technology with them and this helped to make the Indian Industry more scientificly advanced. Since 1991, India has witnessed an explosion of new media. Between 1990 and 1999, approach to television grew from 10% of the urban population to 75% of the urban population. Cable television and foreign movies became widely available for the firstborn time.1) Indian Agriculture Indian farmers are offered no subsidiaries compared to the US Farmers. There has been no encouragement from the government to ensure foreign companies to set up technologies for the farmers assistance. The US Farmers has opened the market for textile chinaware has already set up factories started production where in India hasnt woken up. On the other side of the medal, there is along list of the worst of the time, the foremost casualty being the agribusiness sector. Agriculture has been still remains the backbone of the Indian economy. It plays a vital role not only in providing food nutrition to the people, but also in the supply of raw mater ials to industries to export trade. The financial hood of India the political of India are set to become the topmost slum cities of the world.2) blunt Domestic Product (GDP) Growth rate The Indian economy is going away through a difficult phase caused by several discriminatory domestic external developments, Domestic O/P DD conditions were adversely match by poor performance in agriculture in the denounce two years. The rate of growth of GDP of India has been on the increase from 5.6% to 7% in the 1993-2001 periods. The sectors attracting highest FDI inflows are electrical equipments including Computer software electronics (18 %), service sector (13%), telecommunication (10%), transportation industry (9%) etc.3) Export Import Indias export import is increasing many Indian companies have started becoming in force(p) players in international scenes. There are two alternative causes available. To sell its product in the export market. To produce those type of commodities that the rich in India could consume i.e. luxury consumption goods.4) Technologies IT is given special status. The reason for this is because the Indian government wants to promote it-s nation a as a technological advanced nation and in order to do this they must harass the IT sector. The special status- means the sector and investors (willing to invest in the sector) will arrest many benefits and incentives from the government to do so.5) Poverty The government of India has shown decline in people living in absolute poverty by manipulating statistics. The decline happened when large number of industrial units have been closed down, number of days of work available to workers has declined, downsizing of manpower had taken place in most of the industrial undertakings and non-availability of jobs to the new entrant in employment market is witnessed. Besides, there is an all round decline of prices of agricultural products, forcing farmers to suicide. In sectors like plantation and tea, workers are virtually starving. It is just not possible that people living in absolute poverty can decline in the country under these circumstances.6) Education The growth of higher education and the impact of the global economies have influenced the Indian education system over the last few years.ConclusionIndia has to concentrate on 5 important areas or things to follow to achieve this goal. The areas like technological entrepreneurship, new business spring for small medium enterprises importance of quality management, now prospects in rural areas privatization of financial institutions. There will be prospect growth of Indian economy very much depends upon rural participation in the global race. The rich and poor, rural and urban, service class and agriculturalists, men and women, the bi frosty opposites started troubling the social development.Benefits of GlobalizationEconomies of countries that engage well with the international economy have consistently grown much fas ter than those countries that try to encourage themselves. Well managed open economies have grown at rates that are on average 2 percentage points higher than the rate of growth in economies closed to the forces of globalisation. Countries which have had faster economic growth have then been able to improve living standards and reduce poverty. India has cut its poverty rate in half in the past two decades. China has reduced the number of rural poor from 250 million in 1978 to 34 million in 1999. Cheaper imports also make a wider range of products genial to more people and, through competition, can help promote efficiency and productivity. meliorate wealth through the economic gains of globlisation has led to improved irritate to health care and clean water which has increased life expectancy. more(prenominal) than 85 percent of the worlds population can expect to live for at least sixty years (thats twice as long as the average life expectancy 100 years ago) Improved environme ntal awareness and accountability has contributed to positive environmental outcomes by advance the use of more efficient, less-polluting technologies and facilitating economies imports of renewable substitutes for use in place of unique domestic natural resources.Improved technology has dramatically reduced costs and prices ever-changing the way the world communicates, learns, does business and treats illnesses. Between 1990 and 1999, adult illiteracy rates in developing countries fell from 35 per cent to 29 per cent. ripe communications and the global stagger of information have contributed to the toppling of undemocratic regimes and a growth in liberal democracies around the world. International migration has led to greater recognition of diversity and respect for cultural identities which is improving democracy and access to human rights.Problems of globalizationThere are social and economic costs to globalisation Trade liberalisation rewards competitive industries and penal ises uncompetitive ones, and it requires participating countries to cut economic restructuring and reform. While this will bring benefits in the long term, there are dislocation costs to grapple with in the immediate term, and the social costs for those affected are high. Increased trade and travel have facilitated the spread of human, animal and plant diseases, like HIV/AIDS, SARS and sibilation flu, across borders. Globalisation has also enabled the introduction of cigarettes and tobacco to developing countries, with major adverse health and financial costs associated with that. Trade liberalisation and technological improvements change the economy of a country, destroying traditional agricultural communities and allowing cheap imports of fabricate goods. This can lead to unemployment if not carefully managed, as work in the traditional sectors of the economy becomes scarce and people may not have the appropriate skills for the jobs which may be created. Modern communications h ave spread an awareness of the differences between countries, and increased the demand for migration to richer countries. Richer countries have tightened the barriers against migrant workers, xenophobic fears have increased and people smugglers have exploited vulnerable people. Globalised competition can force a race to the bottom in wage rates and labour standards. It can also foster a conceiver drain of skilled workers, where highly educated and qualified professionals, such as doctors, engineers and IT specialists, migrate to developed countries to benefit from the higher wages and greater line of achievement and lifestyle prospects. This creates severe skilled labour shortages in developing countries.

BPR Microfinance Institution in Indonesia

BPR Micro turn over Institution in Ind unmatchedsiaChapter 1Introduction1.1 place settingIt is believed that pocket-sizedfinance helps natural depression-income mess alleviate their breeding from p everyplacety circumstances in many developing countries. As an stinting dick which has been raised in the midst of s chargeties, the impression of microfinance came up from the f portrayal that low-income throng difficult to entryway fiscal resolve from mercenary or glob avowing concerning insane asylum which may discriminate them or even non including them as latent guests. The reason is that, which a great deal we may hear for round(prenominal) metres, low-income hatful privation of collat periodl for take on around keep down of mvirtuosoy they want, and in the skillful pecuniary excogitations quest of visualise it is apostrophizely to divine service them repayable to unequal cost-bene primed(p) and high traffic cost low-income race tend t o borrow in bitty list solitary(prenominal) when the mer nettile monetary foundation brinytain high cost for treat and assuring their repayment. These costs argon non proportional with the amount of impart given to them.A orb microfinance establishment representing in Indonesia is the manner of speakings bank Perkreditan Rakyat/BPR (Peoples identification bank building or cracker-barrel avow)1 which is ceremonious by the tilling numeral. The of import intent of the BPR is to give ear excellent cour chats2. It means that BPRs gage stir their apply up and contri exactlyion in the phylogenesis of micro and downhearted business3.In Indonesia, manage former(a) developing countries, micro, fine and culture culture metier enterprises (MSMEs)4 breeze signifi crumbt constituent in providence. The fed durationl agency of MSMEs croup be viewed as an important factor for Indonesia to recover from economic crisis and to lead economic produce and rol e. Statistics Indonesia (Badan Pusat Statistik/BPS) and Ministry of Cooperatives and Small-Medium Enterprises reported5 that, the itemise contri only whenion of SMEs shargon to total GDP Indonesia from the period of 2001 2007 was 60.77%, magic spell at the same period great enterprises (LEs) raised 39.23% which bottom be assistn in dining table 1. character referenceStatistics Indonesia (BPS) and Ministry of Cooperatives and Small-Medium Enterprises (various editions)In name of employment creation, MSM enterprises allow passed over bountiful enterprises. put back 3 stick starts worker absorption by images of enterprises. It shows that pocket-size enterprises stand absorbed or so 91% of employment during 1999-2006, while medium and biggish enterprises soak up tind by 5% and by 4% of employment in Indonesia.Source Cooperative Statistics cited in Nazara and Gitaharie (2008), edited by actor base on the entropy which atomic enumerate 18 discussed in the previo us paragraphs, it rear end be concluded that micro, microscopical and medium enterprises (MSMEs) keep up a over medium-large role and a potential as a driver of the municipal economy. Nevertheless, they ease have several constraints, for instance, product diet market accessibility, lack of concern skills, and limited access to pecuniary characters, particularly from commercialised banks, to meet their consume for finance. A survey conducted by Statistics Indonesia (BPS) concluded that the biggest difficulty for micro and microscopic enterprises is lack of p severallyy for financing their business.The survey recognized thatproblem in finance for micro enterprises was accounted for 40.48%, while for olive-sized enterprises was 36.63% (Wardoyo and Prabowo 2003 31).In Indonesia, small and medium enterprises jackpot acquire their finance from several sources. harmonize to Nazara and Gitaharie (2008) which refer to statistical selective information from BPS 2000 82,9 60 SMEs got their finance from non banking fiscal institution 385,383 SMEs got their finance from banks and 661,630 SMEs got their finance from former(a) sources. It is clearly from the data that to the highest degree of SMEs desire on sources former(a)(a) than testis institutions. These figures were non victorious into account for SMEs which have no intelligent entities (Nazara and Gitaharie 2008 8).From SMEs back breaker of view, they face kinky administrative procedure and similarly they have to stick out collateral as guarantee to get beaverows from commercial banks. This material body leads SMEs favoring in till Perkreditan Rakyat/BPR (Peoples attribute rim or countryfied swan) and another(prenominal) fiscal institutions which provide simpler in administrative procedures, but high in interest range comp bed to commercial banks (Nazara and Gitaharie 2008 8). Even though entrepreneurs argon burthen with high interest rates, they do not much kick back slightly it as keen-sighted as they have access to formal realization (Berry et al. 2001 as cited in (Sunarto 2007 2)).In variant with the peg down in which SMEs favoring in BPRs, Sunarto (Sunarto 2007 4) stated that BPRs have several advantages in serving to SMEs, those be (1) its stead which is tightlipped to SMEs, (2) simpler in consultation procedures, (3) accentuate a in the flesh(predicate) come oning in its service and (4) more flexible.This stem is focused on the role and contribution of BPR, one of the formal slips of microfinance institutions in Indonesia, as the suppliers of cash to dissimilar examples of enterprises especially to micro and small. The discussion empha surfaces on recognize apportionment delivered by BPRs to the micro, small and medium enterprises. Comparative epitome get give away be do between commercial banks6 and BPRs for analytical purposes in devil matters. Firstly, the analogy in damage of allocation of creed which does n ot con nerver other variables contend a role in borrowing, for instance interest rates and so on. The relative result is not in the amount of the acknowledgment disbursed but in the percentage of allocation for distributively type of enterprise. Secondly, the semblance in terms of military achievement pull up stakes be discussed through whatsoever indicators. Furthermore, the doing indicators of BPRs will be comp ard with their criteria which set by margin Indonesia to see whether those indicators modify or deteriorating.1.2 investigate documentary and Research QuestionsResearch ObjectiveThe intention of this paper is to learning the role and surgical process of Bank Perkreditan Rakyat (BPR), as one of microfinance institutions in Indonesia, in financing micro, small and medium enterprises.Research QuestionsIn invest to achieve the query objective, this paper proposes explore questions as follows1.What is the role of BPRs as supplier of specie to disparate type s of small and medium enterprises, in particular micro enterprises?2.What is the exertion of BPRs in relation back to opinion prep bedness to micro and small enterprises?1.3Research HypothesisBank Perkreditan Rakyat (BPR) was complete with the main objective is to serve small-scale business and people in boorish argonas. thitherfore, the rootage hypothesis is that BPRs ar reaching their main objective as supplier of funds to micro, small and medium enterprises as mandated by edict (i.e., banking act). In array to meet the objectives, it is conducted full performances which ar reflected from their performance indicators. thitherfore, the second hypothesis is that performance indicators of the BPRs have met with the standards which set by the Indonesia banking writerity.1.4 composition of the PaperThis paper is separate into five chapters. Chapter 1 is doorway which contains place setting of the research, research objective and research questions, research hypothesis, and presidential term of the paper. Chapter 2 is fall over of the bookss and analytical se twainrk for the research. literary works reviews discuss more or less commentarys of microfinance and microfinance institution, the approaches underside be taken by a microfinance institution in order to serve the clients, the mannequins of microfinance institutions, the types of microfinance institutions in Indonesia and the profit of them in relation to potential customers and performance indicators. uninflected framework discusses approximately the way in which the research will be achieved. Chapter 3 is the microfinance institutions in Indonesia which contains their brief narrative and recent condition. Chapter 4 is abridgment of the role of BPRs in financing micro, small and medium enterprises which contains overview of the chapter, data source for the analysis, methodology of the analysis, some schooling near commercial banks and BPRs, and analyzing to say the research questions. Chapter 5 is conclusion.Chapter 2Literature Review and uninflected poser2.1Literature ReviewThere are many definitions about microfinance proposed by several researchers and institutions. This paper uses some definitions given by Robinson, Ledgerwood, Consultative convocation to pecuniary aid the Poor (CGAP), and Asia-Pacific Economic Cooperation (APEC) to describe microfinance.Robinson (Robinson 2001 9) defined microfinance as small size financial track down (mainly save and credit) given to people who having en variety showle or fish or herd people who running micro or small enterprises which producing, recycling, repairing or selling goods people who put uping run people who working for commissions or wages people who having earnings from renting the land, vehicles, drawing off animals, or machinery and equipment and people or other singulars and concourseings from two uncouth and urban areas at the local anesthetic anesthetic level from the developi ng countries.Consultative collection to see the Poor (CGAP)7 which uses terminology silly people and Ledgerwood which uses terminology low-income clients pointed out to person who receives basic financial service from microfinance including self-employed people.Furthermore, Ledgerwood (Ledgerwood 1999 1) stated that definition of microfinance comprises not still in financial mediation but be posts in fond intermediation. Many of microfinance institutions (MFIs)8 provide this tender intermediation function (i.e., gathering arrangement, self-confidence ontogeny, training to enhance capabilities and to increase capacities in terms of financial literacy and managements) go along with financial intermediation. Moreover, she argued that microfinance is a study instrument and it is not just banking.Asia-Pacific Economic Cooperation (Santoso et al. 2005 7) defined microfinance into two understandings. Firstly, it refers to an institution when it designates to an organization whic h offer financial services or banking products, especially gives to the short(p) people. Secondly, it uses for different methods or activities which assigned to the inadequate people in order to access financial services. The silly people comm lonesome(prenominal) ask for contributes, meanwhile commercial banks do not qualify them for loanwords. These understandings are close to each other. An institution which provides products for unforesightful people called as microfinance institution. The usage of products (i.e., assign) which is provided by MFIs will be in force(p) for poor people in generating more earnings.Ledgerwood (Ledgerwood 1999 65-66) stated that the approaches that quite a little be done by microfinance institutions buttocks be dissever into two main categories the minimalist approach or integrated approach. When MFIs do minimalist approach, they provided perform functions of financial intermediation, although sometimes they offer social intermediation i n limited services. Premise that underlie this approach is a-single missing scrap that can be offered by MFIs to the clients in the form of access to credit for them due to the clients are getting less coverage of services from financial institutions, for instance to grow enterprises. On the other hand, integrated approach is a conspiracy of quadruple-spot aspects those are social and financial intermediation, enterprise development and social services. Thus, it is needed a holistic view of the client when a MFI taking this approach. If MFIs are not able to meet all quadruplet services, MFIs only offer services that are really needed by the client as long as this service in line with terminus and objective of MFIs.Since the large-scale indigence for services microfinance activities is in existence, the activities are shown in many countries. The poor people are commonly un-bankable, because of much(prenominal) conditions low skills, poor capacity and severe inabilities. Th ey susceptibility not be served in the commercial banking system. It is because the system needs for formal requirements, along with the tight-laced economic scale and certain guarantee. In official terms, this kind of market is un-named and un-served. There are niche markets for the cede of services for MFIs (Santoso et al. 2005 8).Clients of microfinance institution can not be sort as the poorest of the poor. Generally, they are self-employed and low-income entrepreneur, including traders, food vendors at the street side, small farmers, small producers and artisan who produce souvenirs in at tourism area and so on. The nature of their business usually provides a stable source of income (Ledgerwood 1999 2).In various forms, income is provided by micro enterprises own by the poor. This is done by providing employment. The recycling and repairing better than littering a good, reservation cheap food, clothing, and transportation to be available are some examples. It is withal made to them who are from the low level of formal celestial sphere that are usually very difficult to live with their salaries. The people of this kind of invigoration are often can cope with such(prenominal) a problem with the typical cases mentioned above, but can not handle the more unplayful problem. The other types of problem that are often found are deficiency of capital, skill, official status, and business security. In the meantime, naturally they already have the expertness to face sharp business sense, strong life skills, long wakeless work practice, market knowledge, extensive communication and folksy put forward networks. They withal used to have the ability to live supported by their flexibleness basic consideration (Robinson 2001 12).A recent study in Bosnia and Herzegovina carried out by Hartarska and Nadolnyak (Hartarska and Nadolnyak 2008) used the financing constraint approach. The approach states that microenterprises that have good access to credit will b e less rely on inseparable funding in their enthronization. Using the Living Standards meter check up on and the existence of the MFIs in their area, they compare sensitivity of investment to internal funds in the microenterprises which in that location are MFIs in municipalities they located to microenterprises which at that place is no MFIs in municipalities they located. They concluded that the MFIs reduce the constraint of microenterprises funding when they are exist close to business.There are some casts of microfinance institutions. The first pretense is Grameen Bank. This model is founded in many countries, especially in Bangladesh, from which it established for the first time by Muhammad Junus. In determining target poor clients, Grameen Bank will do it carefully which is usually done through a serial of tests. Loans are given to the group in which each group typically consists of five people and each member of the group guarantee the loan of the other members. This model intensively requires supervision and motivation from the rung to the group borrowers.The second model is Village Bank. An implementing agency establish individual colony bank together with 30-50 people and sets capital for on-lending to other members. Repayments of the loan are usually in a week until 16 weeks whereas the small town bank pays the principal plus interest to implementing agency. The third model is recognize Unions (CUs). Credit Unions are non-profit financial accommodatives which owned and controlled by its members. Besides saving, CU likewise provides loans for both productive and non-productive purposes to the members. The social rank of CUs compared to Grameen Bank is more complicated and usually based on similar bond.The fourthly model is self-help groups (SHGs). This model is close to the second model, hamlet bank, although their structure is less well compared to the village bank.The rank of SHGs is based on the similarity in income and the fun ction of membership approximately 20 people. In principle, they use internal funding, that is saving, to lend it to the members, even though they can also seek external funding as special source of funds. Several NGOs are facilitating and promoting SHGs, but basically, SHGs are direct as an independent institution. The task of seeking additional financing from away is usually helped by NGOs which link between SHGs and other external parties or other funding agencies. This NGOs job close related to to social intermediary function they have, while other NGOs are functioned as financial intermediaries which funding SHGs(Conroy 2003 4-5).In terms of forms, microfinance institutions can be classified as bank ( brass and commercial), nonbank financial institution, saving and loan conjunctive, credit coupler and nongovernmental organization. Pawnbrokers, rotating saving and credit association, and moneylender also part of MFIs and hold authoritative roles in functioning financial int ermediation although they are more at large(p) in legal status (Ledgerwood 1999 1).In Indonesia, several institutions have already served microfinance services for such a long period. Those institutions can be divided into four types. The first type is formal microfinance institutions (MFIs). This type of MFI is adjust and manage as banking institution and so their activities as financial intermediaries subject to banking ruler and supervision. such(prenominal) institutions included in this type are BRI social unit (state-owned microbank), commercial banks with microfinance services and unpolished Bank (Bank Perkreditan Rakyat/BPR).The second type is semi formal MFIs which registered and or authorized by state authorities or local governments, so they are not regulated by banking authority (Bank Indonesia). Including in this type are cooperatives, Muslim-based cooperatives (Baitul Maal wat Tamwil/BMT), unpolished credit institution (Badan Kredit Desa/BKD) and microfinance owned and managed by NGOs. The third type is informal MFIs that operate outside the framework of government regulation, among others, are credit union, rotating credit and saving association (ROSCA), moneylenders, landlords and so on. The fourth type is microcredit programs established by the government in channeling credit to subsidise the poor through a chassis of institutions (Nugroho 2008 181-182). Further explanation about these four microfinance services especially the first three types of MFIs will be presented in chapter 3.In icon 1 we can see the pyramid of microfinance institutions with their potential customers in Indonesia. The top layer shows formal MFIs (BRI Unit, rural Banks/ BPRs and LDKPs). They provide financial services for the top level of microfinance market. This type of MFIs is intended to serve small business which has characterized with stable income flows therefore these MFIs potential clients are non-poor and not so poor people. In the middle layer, sem i- formal MFIs serve microfinance services for the poor households. This layer includes rural credit institutions (Bank Kredit Desa/BKD), cooperatives, BMT and NGOs. Clients in this layer are characterized by unstable flow of income. At the bottom layer of the pyramid the immense human activity of potential clients which need microfinance services. They are very poor people which are characterized by unpredictable income. They need the microfinance services in order to ensure their uncertain income, so they need a small loan to overwhelm the difficulties of life (Nugroho 2008 184-185). get into 1 The Pyramid of Microfinance function in IndonesiaSource BI and GTZ (2000) cited in Nugroho (2008)As mentioned above, farming(prenominal) Bank (Bank Perkreditan Rakyat/BPR) is one of the formal types of microfinance in Indonesia. Its existence is established by Banking Act number 7 of 1992 as amended by Banking Act number 10 of 1998. The main goal of the rural bank is to serve small bus iness and rural communities.In order to deliver their services to the customers, a microfinance institution requires a good performance. This performance can be seen from some indicators. flavor at these indicators, we can decide how well they not only can do financially but also it can also mannequin the future performance goals. There are a large number of performance indicators that can be used by MFIs in quantity the financial performance.One of the principles that can be used is the CAMEL system, ACCION. This system examines five traditional aspects which are regarded as the most important thing in the practices of the financial intermediaries. The five aspects (capital adequacy, asset quality, management, earnings, and liquidity) be the sign of the financial condition and operational strength of the MFI in common (Ledgerwood 1999 205,227,229).2.2Analytical role model base on the theoretical framework that has been presented in the previous role, the author uses Figure 2 be low describing the analytical framework used in the research which answering the research questions asked.There are two parties mingled in the financial market.On one hand, there is a try side which is financial institutions that act as financial intermediation agents or it aptitude be function as other than financial intermediation like social intermediation or something else. These financial institutions include commercial banks, non-banks financial institutions (insurances company, ventura capital, etc), and microfinance institutions (in different types and forms). On the other hand, on the demand side, there are some parties that require financing for different purposes, among others for working capital and investment usage which is belongs to micro, small and medium enterprises (MSMEs).The problem is that not all of these financial institutions allow MSMEs as their client due to several requirements which can not be fulfilled by MSMEs (collateral and bureaucratic procedures, for instances) or it might be comes from the MSMEs itself that no need too much funds (small financing). Here, microfinance institutions fit with the need of MSMEs. The mechanism then runs as common supply and demand in the market MFIs, as financial intermediaries, offer credit or loan to MSMEs. Furthermore, MSMEs use the loan for running their operational activities (working capital usage) or for accumulating their sensible capital (investment usage). At the end of the story, output of MSMEs will contribute to matter income (GDP) and at the same time generates income for the owners and employees.Figure 2 Analytical simulation of the Research Supply and Demand in financial commercializeSource authors graphThis paper focuses on the supply side of particular financial intermediaries in the financial market those are microfinance institutions. In other words, development Ledgerwoods terminology mentioned in literature review, the paper mainly looks at the role of MFIs in terms o f minimalist approach how they perform as financial intermediations in delivering credit or loan. redundant attention given to Rural Banks, one of formal MFIs in Indonesia in allocating their credit to different types of enterprises such as micro, small, medium and large enterprises.There are several reasons why this paper discusses on Rural Banks as unit of analysis. Firstly, it is states in the regulation (Banking Act) that the main objective of Rural Banks is to serve small scale business and looking into the pyramid of MFIs appeared in Figure 1. It means that Rural Banks have a specialization as small scale business banking, especially micro enterprises. This paper wants to see to which termination this mission is successfully executed. Secondly, Rural Banks are the second largest microfinance institutions in terms of asset, third party funds composed and number of debtors. According to Bank Indonesia (2008)9, they posses 35% of total MFIs assets 30.43% of third party funds c ollected on total MFIs and 29.15% of total number debtors on total MFIs.This study proposes two research questions. The first research question relates to the role of rural banks as financial intermediaries in delivering credit to different types of business especially micro and small enterprises. In addressing the first research question, the paper uses comparative analysis and simple calculations in terms of credit disbursement for both commercial banks and rural banks so that the share (percentage) of credit allocation to different types of enterprises to be known. In order to recover the result, some criteria and assumption are utilize in the study. This is done due to there is no data available about the definite amount of credit disbursed by each Rural Banks or commercial banks to different type of enterprises. The discussion focuses only on the amount of credit allocation, so that other variables that determine the credit such as interest rate, collateral, and so forth are not discussed in this study.The second research question indicates the performance indicators of rural banks in relation to credit provision to micro enterprises. These indicators include Loan to gravel proportion (LDR), Returns on Assets Ratio (ROA) and Non-Performing Loan Ratio (NPL) which refer to manager of Bank Indonesia Decree number 30/12/Kep/Dir and Bank Indonesias letter No. 30/3/UPPB about Rural Banks steadiness Evaluation. Furthermore, semblance will be made between these indicators and criteria.Chapter 3Microfinance Institutions in Indonesia3.1Microfinance Institutions in IndonesiaAs developing country, Indonesia has long experience and explanation in developing microfinance institution which has made it possible for poor or low-income people to overcome financial constraints and to access financial institutions. For this condition, some researchers like Berenbach and Churchill called that Indonesia is the most develop market for microfinance services in the world (Barenbach and Churchill 1997 as cited in (Santoso et al. 2005 43)). The development of microfinance institution began for the first time in Dutch compound era when several well-educated local people saw deteriorating economy happened in their community and they looked for the need of this services and started organize it. The two noted institutions best known as pioneer in microfinance institutions and exist since colonial era are cooperative and Bank Rakyat Indonesia (BRI).As mentioned in chapter 2, microfinance institutions in Indonesia can be classified into four types (Nugroho 2008), those are formal microfinance institutions, semi-formal MFIs, informal MFIs and microcredit program which is established by the government for delivering credit to poor people through several institutions. In this chapter the latter type of MFI will not be discussed. The discussion is emphasizes on three other institutions. statuesque MFIs are financial intermediary institutions which refer a nd subject to banking regulation and therefore oversee by Bank Indonesia. Semiformal MFIs are not regulated by Bank Indonesia as a banking authority, but they are authorize and or registered by other state authorities or local government. free-and-easy MFIs operate outside government regulations.Nugroho (Nugroho 2008) described institutions which include in each type of MFI as follows formal MFIs including BRI Unit, Rural Bank (BPR) and The Rural Credit livestock Institutions (Lembaga Dana Kredit Pedesaan/LDKP) semiformal MFIs covering rural credit institution (Badan Kredit Desa/ BKD), microfinance NGO, credit cooperatives including Islamic-based cooperatives (Baitul Maal wat Tamwil/BMT) informal MFIs including credit unions, rotating credit and saving association (ROSCA), moneylenders, traders and landlords. Table 3.1 provides map of microfinance institutions by types in Indonesia in terms of units and their financial services.Bank Rakyat Indonesia UnitLembaga Dana Kredit Perdes aan (LDKP) The Rural Credit Fund InstitutionsThe Rural Credit Fund Institutions (LDKP) is the term of credit fund institution that operates in rural area, including a variety of non bank microfinance institutions with different names, ownership, organization, services and outreach, that was established on initiatives of tyke government. LDKP belongs to provincial, district or village government which, in their operation, have to obtain license from and was regulated by provincial government within the study restrictive framework. they get technical support and supervision from regional development bank (BPD) which are owned by provincial government.. since it was established in 1970s, the number of LDKP getting less from 1978 to 630 in 2000, this decrease due to the regeneration of LDKP to peoples cerdit banks(BPR) and late only about one quarter of LDKPhave engender banks.The BadanKredit Desa (BKD)BKD is a profitable and sustainable village level financial institution that provide financial services with a outreach to low income people. it was operated by a commission that controlled by head of village and have sustained the operation since colonial era. On behalf of Bank Indonesia, BRI branch offices supervise and provide technical attentionfor BKD.in 1970s indonesian government did not pay much attention to this system. instead, the governmentgive more attention to the cooperative system. this make hard for BKD system to developed.in 1990s BRI tried to restore BKD by providing basic capital, ameliorate administrative system and introducing new saving instruments, however, 1992 banking act burden the expanding BKD system. BKD is recognized as peoples credit bank (BPR) and has been run as a licensed and regulated banksince 1992 banking act but the frame work setting, supervision and technical assistance has not changed since 2000.CooperativesHere, the brief history of cooperative in Indonesia refers to Santoso et al (2005) and Ministry of Coopera tive, Small and Medium Enterprises website (www.depkop.go.id, 2009) as references. The apprehension of cooperative was delivered for the first time by Patih R. Aria Wiriatmaja at Purwokerto, a small town in Central Java, in 1896. Then, De Wolffvan Westerrode continued his efforts. In 1908, the form of national movement, Dr. Sutomo founded Budi Utomo which played a significant role for cooperatives improving the life of society.Then, Verordening op de Cooperatieve Vereeniging was established. Twelve years after that, in 1927, another type of cooperative called Regelling Inlandsche Cooperatieve was launched. In the same year, to develop bargaining power among local entrepreneurs, Islamic Trader Union (Serikat Dagang Islam) was established. Indonesian National Party (Partai Nasional Indonesia) which had activities in promoting cooperative spirit was established in 1929.3.2Bank Perkreditan Rakyat (BPR)Brief autobiographySteinwand (Steinwand 2001) provided elaborate periodical histor y about Rural Bank. He divided the history into four parts of periods the evolution of the colonial BPR (1895-1945), the period from liberty to financial sector emend (1945-1983), the period from financial sector reform to financial crisis (1983-1999) and at the present condition.Rural Bank Position in Financial System in IndonesiaChapter 4Analysis of the Role of Bank Perkreditan Rakyat (BPR) in Financing Micro, Small and Medium Enterprises4.1OverviewChapter 4 consists of 6 component parts which each persona aimed to answer the research questions. Section 1 is a superior general information about what will be discussed in this chapter section 2 discusses about the source of the data used in the analysis section 3 is the methodology section 4 is about overview the condition of Bank Perkreditan Rakyat (BPRs) and commercial banks (CBs) in Indonesia using selected indicators, third party funds and credits section 5 tries to reply the first research question by using comparative ana lysis between commercial banks and BPRs and section 6 is the exist section which answering the second research question about the performance indicators ofBPR Microfinance Institution in IndonesiaBPR Microfinance Institution in IndonesiaChapter 1Introduction1.1BackgroundIt is believed that microfinance helps low-income people alleviate their life from poverty circumstances in many developing countries. As an economic instrument which has been raised in the middle of seventies, the thought of microfinance came up from the fact that low-income people difficult to access financial services from commercial or formal banking institution which may disadvantage them or even not including them as potential clients. The reason is that, which often we may hear for several times, low-income people lack of collateral for guarantee some amount of money they want, and in the commercial financial institutions point of view it is costly to serve them due to unequal cost-benefit and high transactio n cost low-income people tend to borrow in small amount but the commercial financial institution maintain high cost for processing and assuring their repayment. These costs are not proportional with the amount of loan given to them.A formal microfinance institution existing in Indonesia is the Bank Perkreditan Rakyat/BPR (Peoples Credit Bank or Rural Bank)1 which is established by the Banking Act. The main objective of the BPR is to serve small businesses2. It means that BPRs can enhance their role and contribution in the development of micro and small business3.In Indonesia, like other developing countries, micro, small and medium enterprises (MSMEs)4 play significant role in economy. The role of MSMEs can be viewed as an important factor for Indonesia to recover from economic crisis and to lead economic growth and employment. Statistics Indonesia (Badan Pusat Statistik/BPS) and Ministry of Cooperatives and Small-Medium Enterprises reported5 that, the average contribution of SMEs s hare to total GDP Indonesia from the period of 2001 2007 was 60.77%, while at the same period large enterprises (LEs) contributed 39.23% which can be seen in Table 1.SourceStatistics Indonesia (BPS) and Ministry of Cooperatives and Small-Medium Enterprises (various editions)In terms of employment creation, MSM enterprises have passed over large enterprises. Table 3 provides worker absorption by types of enterprises. It shows that small enterprises have absorbed approximately 91% of employment during 1999-2006, while medium and large enterprises have provided by 5% and by 4% of employment in Indonesia.Source Cooperative Statistics cited in Nazara and Gitaharie (2008), edited by authorBased on the data which are discussed in the previous paragraphs, it can be concluded that micro, small and medium enterprises (MSMEs) have a big role and a potential as a driver of the domestic economy. Nevertheless, they still have several constraints, for instance, product market accessibility, lack of management skills, and limited access to financial sources, especially from commercial banks, to meet their demand for finance. A survey conducted by Statistics Indonesia (BPS) concluded that the biggest problem for micro and small enterprises is lack of capital for financing their business.The survey recognized thatproblem in finance for micro enterprises was accounted for 40.48%, while for small enterprises was 36.63% (Wardoyo and Prabowo 2003 31).In Indonesia, small and medium enterprises can acquire their finance from several sources. According to Nazara and Gitaharie (2008) which refer to statistical data from BPS 2000 82,960 SMEs got their finance from non banking financial institution 385,383 SMEs got their finance from banks and 661,630 SMEs got their finance from other sources. It is clearly from the data that most of SMEs rely on sources other than formal institutions. These figures were not taking into account for SMEs which have no legal entities (Nazara and Gitaharie 2008 8).From SMEs point of view, they face kinky administrative procedure and also they have to provide collateral as guarantee to get loans from commercial banks. This condition leads SMEs favoring in Bank Perkreditan Rakyat/BPR (Peoples Credit Bank or Rural Bank) and other financial institutions which provide simpler in administrative procedures, but higher in interest rates compared to commercial banks (Nazara and Gitaharie 2008 8). Even though entrepreneurs are burdened with high interest rates, they do not much complain about it as long as they have access to formal credit (Berry et al. 2001 as cited in (Sunarto 2007 2)).In line with the condition in which SMEs favoring in BPRs, Sunarto (Sunarto 2007 4) stated that BPRs have several advantages in serving to SMEs, those are (1) its location which is close to SMEs, (2) simpler in credit procedures, (3) accentuate a personal approach in its services and (4) more flexible.This paper is focused on the role and contribution of BPR, one of the formal types of microfinance institutions in Indonesia, as the suppliers of funds to different types of enterprises especially to micro and small. The discussion emphasizes on credit allocation delivered by BPRs to the micro, small and medium enterprises. Comparative analysis will be made between commercial banks6 and BPRs for analytical purposes in two things. Firstly, the comparison in terms of allocation of credit which does not consider other variables playing a role in borrowing, for instance interest rates and so on. The comparative result is not in the amount of the credit disbursed but in the percentage of allocation for each type of enterprise. Secondly, the comparison in terms of performance will be discussed through some indicators. Furthermore, the performance indicators of BPRs will be compared with their criteria which set by Bank Indonesia to see whether those indicators improving or deteriorating.1.2Research Objective and Research QuestionsResearch Objecti veThe objective of this paper is to study the role and performance of Bank Perkreditan Rakyat (BPR), as one of microfinance institutions in Indonesia, in financing micro, small and medium enterprises.Research QuestionsIn order to achieve the research objective, this paper proposes research questions as follows1.What is the role of BPRs as supplier of funds to different types of small and medium enterprises, in particular micro enterprises?2.What is the performance of BPRs in relation to credit provision to micro and small enterprises?1.3Research HypothesisBank Perkreditan Rakyat (BPR) was established with the main objective is to serve small-scale business and people in rural areas. Therefore, the first hypothesis is that BPRs are reaching their main objective as supplier of funds to micro, small and medium enterprises as mandated by regulation (i.e., banking act). In order to meet the objectives, it is needed good performances which are reflected from their performance indicators. Therefore, the second hypothesis is that performance indicators of the BPRs have met with the standards which set by the Indonesia banking authority.1.4Organization of the PaperThis paper is divided into five chapters. Chapter 1 is introduction which contains background of the research, research objective and research questions, research hypothesis, and organization of the paper. Chapter 2 is review of the literatures and analytical framework for the research. Literature reviews discuss about definitions of microfinance and microfinance institution, the approaches can be taken by a microfinance institution in order to serve the clients, the models of microfinance institutions, the types of microfinance institutions in Indonesia and the pyramid of them in relation to potential customers and performance indicators.Analytical framework discusses about the way in which the research will be achieved. Chapter 3 is the microfinance institutions in Indonesia which contains their brief histo ry and recent condition. Chapter 4 is analysis of the role of BPRs in financing micro, small and medium enterprises which contains overview of the chapter, data source for the analysis, methodology of the analysis, some information about commercial banks and BPRs, and analyzing to answer the research questions. Chapter 5 is conclusion.Chapter 2Literature Review and Analytical Framework2.1Literature ReviewThere are many definitions about microfinance proposed by several researchers and institutions. This paper uses some definitions given by Robinson, Ledgerwood, Consultative Group to Assist the Poor (CGAP), and Asia-Pacific Economic Cooperation (APEC) to describe microfinance.Robinson (Robinson 2001 9) defined microfinance as small size financial services (mainly saving and credit) given to people who having farm or fish or herd people who running micro or small enterprises which producing, recycling, repairing or selling goods people who offering services people who working for comm issions or wages people who having earnings from renting the land, vehicles, draft animals, or machinery and equipment and people or other individuals and groups from both rural and urban areas at the local level from the developing countries.Consultative Group to Assist the Poor (CGAP)7 which uses terminology poor people and Ledgerwood which uses terminology low-income clients pointed out to person who receives basic financial services from microfinance including self-employed people.Furthermore, Ledgerwood (Ledgerwood 1999 1) stated that definition of microfinance comprises not only in financial intermediation but also in social intermediation. Many of microfinance institutions (MFIs)8 provide this social intermediation function (i.e., group arrangement, self-confidence development, training to enhance capabilities and to increase capacities in terms of financial literacy and managements) go along with financial intermediation. Moreover, she argued that microfinance is a developme nt instrument and it is not just banking.Asia-Pacific Economic Cooperation (Santoso et al. 2005 7) defined microfinance into two understandings. Firstly, it refers to an institution when it designates to an organization which offer financial services or banking products, especially loans to the poor people. Secondly, it uses for different methods or activities which assigned to the poor people in order to access financial services. The poor people usually ask for loans, meanwhile commercial banks do not qualify them for loans. These understandings are close to each other. An institution which provides products for poor people called as microfinance institution. The usage of products (i.e., credits) which is provided by MFIs will be beneficial for poor people in generating more earnings.Ledgerwood (Ledgerwood 1999 65-66) stated that the approaches that can be done by microfinance institutions can be divided into two main categories the minimalist approach or integrated approach. When MFIs do minimalist approach, they only perform functions of financial intermediation, although sometimes they offer social intermediation in limited services. Premise that underlie this approach is a-single missing piece that can be offered by MFIs to the clients in the form of access to credit for them due to the clients are getting less coverage of services from financial institutions, for instance to grow enterprises. On the other hand, integrated approach is a combination of four aspects those are social and financial intermediation, enterprise development and social services. Thus, it is needed a holistic view of the client when a MFI taking this approach. If MFIs are not able to meet all four services, MFIs only offer services that are really needed by the client as long as this service in line with goal and objective of MFIs.Since the large-scale demand for services microfinance activities is in existence, the activities are shown in many countries. The poor people are usual ly un-bankable, because of such conditions low skills, poor capacity and severe inabilities. They might not be served in the commercial banking system. It is because the system needs for formal requirements, along with the proper economic scale and certain guarantee. In official terms, this kind of market is un-named and un-served. There are niche markets for the supply of services for MFIs (Santoso et al. 2005 8).Clients of microfinance institution can not be classified as the poorest of the poor. Generally, they are self-employed and low-income entrepreneur, including traders, food vendors at the street side, small farmers, small producers and artisan who produce souvenirs in at tourism area and so on. The nature of their business usually provides a stable source of income (Ledgerwood 1999 2).In various forms, income is provided by micro enterprises owned by the poor. This is done by providing employment. The recycling and repairing better than littering a good, making cheap food, clothing, and transportation to be available are some examples. It is also made to them who are from the low level of formal sector that are usually very difficult to live with their salaries. The people of this kind of life are often can cope with such a problem with the typical cases mentioned above, but can not handle the more serious problem. The other types of problem that are often found are deficiency of capital, skill, official status, and business security. In the meantime, naturally they already have the ability to face sharp business sense, strong life skills, long hard work practice, market knowledge, extensive communication and informal support networks. They also used to have the ability to live supported by their flexibility basic consideration (Robinson 2001 12).A recent study in Bosnia and Herzegovina carried out by Hartarska and Nadolnyak (Hartarska and Nadolnyak 2008) used the financing constraint approach. The approach states that microenterprises that have good access to credit will be less rely on internal funding in their investment. Using the Living Standards Measurement Survey and the existence of the MFIs in their area, they compare sensitivity of investment to internal funds in the microenterprises which there are MFIs in municipalities they located to microenterprises which there is no MFIs in municipalities they located. They concluded that the MFIs reduce the constraint of microenterprises funding when they are exist close to business.There are some models of microfinance institutions. The first model is Grameen Bank. This model is founded in many countries, especially in Bangladesh, from which it established for the first time by Muhammad Junus. In determining target poor clients, Grameen Bank will do it carefully which is usually done through a series of tests. Loans are given to the group in which each group typically consists of five people and each member of the group guarantee the loan of the other members. This model inten sively requires supervision and motivation from the staff to the group borrowers.The second model is Village Bank. An implementing agency establish individual village bank together with 30-50 people and sets capital for on-lending to other members. Repayments of the loan are usually in a week until 16 weeks whereas the village bank pays the principal plus interest to implementing agency. The third model is Credit Unions (CUs). Credit Unions are non-profit financial cooperatives which owned and controlled by its members. Besides saving, CU also provides loans for both productive and non-productive purposes to the members. The membership of CUs compared to Grameen Bank is more heterogeneous and usually based on similar bond.The fourth model is self-help groups (SHGs). This model is close to the second model, village bank, although their structure is less well compared to the village bank.The membership of SHGs is based on the similarity in income and the number of membership approxima tely 20 people. In principle, they use internal funding, that is saving, to lend it to the members, even though they can also seek external funding as additional source of funds. Several NGOs are facilitating and promoting SHGs, but basically, SHGs are directed as an independent institution. The task of seeking additional financing from outside is usually helped by NGOs which link between SHGs and other external parties or other funding agencies. This NGOs job close related to social intermediary function they have, while other NGOs are functioned as financial intermediaries which funding SHGs(Conroy 2003 4-5).In terms of forms, microfinance institutions can be classified as bank (government and commercial), nonbank financial institution, saving and loan cooperative, credit union and nongovernmental organization. Pawnbrokers, rotating saving and credit association, and moneylender also part of MFIs and hold significant roles in functioning financial intermediation although they are more informal in legal status (Ledgerwood 1999 1).In Indonesia, several institutions have already served microfinance services for such a long period. Those institutions can be divided into four types. The first type is formal microfinance institutions (MFIs). This type of MFI is regulated and supervised as banking institution and therefore their activities as financial intermediaries subject to banking regulation and supervision. Such institutions included in this type are BRI Unit (state-owned microbank), commercial banks with microfinance services and Rural Bank (Bank Perkreditan Rakyat/BPR).The second type is semi formal MFIs which registered and or licensed by state authorities or local governments, therefore they are not regulated by banking authority (Bank Indonesia). Including in this type are cooperatives, Islamic-based cooperatives (Baitul Maal wat Tamwil/BMT), rural credit institution (Badan Kredit Desa/BKD) and microfinance owned and managed by NGOs. The third type is in formal MFIs that operate outside the framework of government regulation, among others, are credit union, rotating credit and saving association (ROSCA), moneylenders, landlords and so on. The fourth type is microcredit programs established by the government in channeling credit to subsidize the poor through a variety of institutions (Nugroho 2008 181-182). Further explanation about these four microfinance services especially the first three types of MFIs will be presented in chapter 3.In Figure 1 we can see the pyramid of microfinance institutions with their potential customers in Indonesia. The top layer shows formal MFIs (BRI Unit, Rural Banks/ BPRs and LDKPs). They provide financial services for the top level of microfinance market. This type of MFIs is intended to serve small business which has characterized with stable income flows therefore these MFIs potential clients are non-poor and not so poor people. In the middle layer, semi- formal MFIs serve microfinance services for t he poor households. This layer includes rural credit institutions (Bank Kredit Desa/BKD), cooperatives, BMT and NGOs. Clients in this layer are characterized by unstable flow of income. At the bottom layer of the pyramid the huge number of potential clients which need microfinance services. They are very poor people which are characterized by unpredictable income. They need the microfinance services in order to ensure their uncertain income, so they need a small loan to overcome the difficulties of life (Nugroho 2008 184-185).Figure 1 The Pyramid of Microfinance Services in IndonesiaSource BI and GTZ (2000) cited in Nugroho (2008)As mentioned above, Rural Bank (Bank Perkreditan Rakyat/BPR) is one of the formal types of microfinance in Indonesia. Its existence is established by Banking Act number 7 of 1992 as amended by Banking Act number 10 of 1998. The main goal of the rural bank is to serve small business and rural communities.In order to deliver their services to the customers, a microfinance institution requires a good performance. This performance can be seen from some indicators. Looking at these indicators, we can decide how well they not only can do financially but also it can also build the future performance goals. There are a large number of performance indicators that can be used by MFIs in measuring the financial performance.One of the principles that can be used is the CAMEL system, ACCION. This system examines five traditional aspects which are regarded as the most important thing in the practices of the financial intermediaries. The five aspects (capital adequacy, asset quality, management, earnings, and liquidity) be the sign of the financial condition and operational strength of the MFI in common (Ledgerwood 1999 205,227,229).2.2Analytical FrameworkBased on the theoretical framework that has been presented in the previous section, the author uses Figure 2 below describing the analytical framework used in the research which answering the resea rch questions asked.There are two parties involved in the financial market.On one hand, there is a supply side which is financial institutions that act as financial intermediation agents or it might be function as other than financial intermediation like social intermediation or something else. These financial institutions include commercial banks, non-banks financial institutions (insurances company, ventura capital, etc), and microfinance institutions (in different types and forms). On the other hand, on the demand side, there are some parties that require financing for different purposes, among others for working capital and investment usage which is belongs to micro, small and medium enterprises (MSMEs).The problem is that not all of these financial institutions allow MSMEs as their client due to several requirements which can not be fulfilled by MSMEs (collateral and bureaucratic procedures, for instances) or it might be comes from the MSMEs itself that no need too much funds ( small financing). Here, microfinance institutions fit with the need of MSMEs. The mechanism then runs as common supply and demand in the market MFIs, as financial intermediaries, offer credit or loan to MSMEs. Furthermore, MSMEs use the loan for running their operational activities (working capital usage) or for accumulating their physical capital (investment usage). At the end of the story, output of MSMEs will contribute to national income (GDP) and at the same time generates income for the owners and employees.Figure 2 Analytical Framework of the Research Supply and Demand in Financial MarketSource authors graphThis paper focuses on the supply side of particular financial intermediaries in the financial market those are microfinance institutions. In other words, using Ledgerwoods terminology mentioned in literature review, the paper mainly looks at the role of MFIs in terms of minimalist approach how they perform as financial intermediations in delivering credit or loan. Special attention given to Rural Banks, one of formal MFIs in Indonesia in allocating their credit to different types of enterprises such as micro, small, medium and large enterprises.There are several reasons why this paper discusses on Rural Banks as unit of analysis. Firstly, it is states in the regulation (Banking Act) that the main objective of Rural Banks is to serve small scale business and looking into the pyramid of MFIs appeared in Figure 1. It means that Rural Banks have a specialization as small scale business banking, especially micro enterprises. This paper wants to see to which extent this mission is successfully executed. Secondly, Rural Banks are the second largest microfinance institutions in terms of asset, third party funds collected and number of debtors. According to Bank Indonesia (2008)9, they posses 35% of total MFIs assets 30.43% of third party funds collected on total MFIs and 29.15% of total number debtors on total MFIs.This study proposes two research questions. The first research question relates to the role of rural banks as financial intermediaries in delivering credit to different types of business especially micro and small enterprises. In addressing the first research question, the paper uses comparative analysis and simple calculations in terms of credit disbursement for both commercial banks and rural banks so that the share (percentage) of credit allocation to different types of enterprises to be known. In order to obtain the result, some criteria and assumption are applied in the study. This is done due to there is no data available about the definite amount of credit disbursed by either Rural Banks or commercial banks to different type of enterprises. The discussion focuses only on the amount of credit allocation, so that other variables that determine the credit such as interest rate, collateral, and so forth are not discussed in this study.The second research question indicates the performance indicators of rural banks in rela tion to credit provision to micro enterprises. These indicators include Loan to Deposit Ratio (LDR), Returns on Assets Ratio (ROA) and Non-Performing Loan Ratio (NPL) which refer to Director of Bank Indonesia Decree number 30/12/Kep/Dir and Bank Indonesias Letter No. 30/3/UPPB about Rural Banks Soundness Evaluation. Furthermore, comparison will be made between these indicators and criteria.Chapter 3Microfinance Institutions in Indonesia3.1Microfinance Institutions in IndonesiaAs developing country, Indonesia has long experience and history in developing microfinance institution which has made it possible for poor or low-income people to overcome financial constraints and to access financial institutions. For this condition, some researchers like Berenbach and Churchill called that Indonesia is the most developed market for microfinance services in the world (Barenbach and Churchill 1997 as cited in (Santoso et al. 2005 43)). The development of microfinance institution began for the first time in Dutch colonial era when several well-educated local people saw deteriorating economy happened in their community and they looked for the need of this services and started organize it. The two famous institutions best known as pioneer in microfinance institutions and exist since colonial era are cooperative and Bank Rakyat Indonesia (BRI).As mentioned in chapter 2, microfinance institutions in Indonesia can be classified into four types (Nugroho 2008), those are formal microfinance institutions, semiformal MFIs, informal MFIs and microcredit program which is established by the government for delivering credit to poor people through several institutions. In this chapter the latter type of MFI will not be discussed. The discussion is emphasizes on three other institutions. Formal MFIs are financial intermediary institutions which refer and subject to banking regulation and therefore supervised by Bank Indonesia. Semiformal MFIs are not regulated by Bank Indonesia as a ban king authority, but they are licensed and or registered by other state authorities or local government. Informal MFIs operate outside government regulations.Nugroho (Nugroho 2008) described institutions which include in each type of MFI as follows formal MFIs including BRI Unit, Rural Bank (BPR) and The Rural Credit Fund Institutions (Lembaga Dana Kredit Pedesaan/LDKP) semiformal MFIs covering rural credit institution (Badan Kredit Desa/ BKD), microfinance NGO, credit cooperatives including Islamic-based cooperatives (Baitul Maal wat Tamwil/BMT) informal MFIs including credit unions, rotating credit and saving association (ROSCA), moneylenders, traders and landlords. Table 3.1 provides map of microfinance institutions by types in Indonesia in terms of units and their financial services.Bank Rakyat Indonesia UnitLembaga Dana Kredit Perdesaan (LDKP) The Rural Credit Fund InstitutionsThe Rural Credit Fund Institutions (LDKP) is the term of credit fund institution that operates in rura l area, including a variety of non bank microfinance institutions with different names, ownership, organization, services and outreach, that was established on initiatives of provincial government. LDKP belongs to provincial, district or village government which, in their operation, have to obtain license from and was regulated by provincial government within the national regulatory framework. they get technical support and supervision from regional development bank (BPD) which are owned by provincial government.. since it was established in 1970s, the number of LDKP getting less from 1978 to 630 in 2000, this decrease due to the conversion of LDKP to peoples cerdit banks(BPR) and recently only about one quarter of LDKPhave become banks.The BadanKredit Desa (BKD)BKD is a profitable and sustainable village level financial institution that provide financial services with a outreach to low income people. it was operated by a committee that controlled by head of village and have sustain ed the operation since colonial era. On behalf of Bank Indonesia, BRI branch offices supervise and provide technical assistancefor BKD.in 1970s indonesian government did not pay much attention to this system. instead, the governmentgive more attention to the cooperative system. this make hard for BKD system to developed.in 1990s BRI tried to revive BKD by providing basic capital, improving administrative system and introducing new saving instruments, however, 1992 banking act burden the expanding BKD system. BKD is recognized as peoples credit bank (BPR) and has been operating as a licensed and regulated banksince 1992 banking act but the frame work setting, supervision and technical assistance has not changed since 2000.CooperativesHere, the brief history of cooperative in Indonesia refers to Santoso et al (2005) and Ministry of Cooperative, Small and Medium Enterprises website (www.depkop.go.id, 2009) as references. The thought of cooperative was delivered for the first time by Pa tih R. Aria Wiriatmaja at Purwokerto, a small town in Central Java, in 1896. Then, De Wolffvan Westerrode continued his efforts. In 1908, the year of national movement, Dr. Sutomo founded Budi Utomo which played a significant role for cooperatives improving the life of society.Then, Verordening op de Cooperatieve Vereeniging was established. Twelve years after that, in 1927, another type of cooperative called Regelling Inlandsche Cooperatieve was launched. In the same year, to develop bargaining power among local entrepreneurs, Islamic Trader Union (Serikat Dagang Islam) was established. Indonesian National Party (Partai Nasional Indonesia) which had activities in promoting cooperative spirit was established in 1929.3.2Bank Perkreditan Rakyat (BPR)Brief HistorySteinwand (Steinwand 2001) provided detail periodical history about Rural Bank. He divided the history into four parts of periods the evolution of the colonial BPR (1895-1945), the period from independence to financial sector reform (1945-1983), the period from financial sector reform to financial crisis (1983-1999) and at the present condition.Rural Bank Position in Financial System in IndonesiaChapter 4Analysis of the Role of Bank Perkreditan Rakyat (BPR) in Financing Micro, Small and Medium Enterprises4.1OverviewChapter 4 consists of 6 sections which each section aimed to answer the research questions. Section 1 is a general information about what will be discussed in this chapter section 2 discusses about the source of the data used in the analysis section 3 is the methodology section 4 is about overview the condition of Bank Perkreditan Rakyat (BPRs) and commercial banks (CBs) in Indonesia using selected indicators, third party funds and credits section 5 tries to reply the first research question by using comparative analysis between commercial banks and BPRs and section 6 is the last section which answering the second research question about the performance indicators of