Analysis of the contribution of agribusiness microfinance institutions and government policies on increasing farmers' income in Indonesia

Abstract

Due to its vital role in economic development, the agriculture sector has recently garnered global attention. To increase the income of the agriculture sector, the agricultural finance institution and government support are required. Consequently, this study examines the effect of agricultural credits supplied by micro-financial institutions, the profitability of agribusiness microfinance organizations, government subsidies, government agricultural loans, and economic growth on the income of Indonesian farmers. From 1991 to 2020, secondary sources such as central bank databases and World Development Indicators (WDI) were used to collect the study's secondary data. The autoregressive distributed lag (ARDL) method was utilized to examine the understudy structures. In Indonesia, agricultural credits, the profitability of agribusiness microfinance institutions, government subsidies, government agricultural loans, and economic growth were found to have a strong and positive relationship with farmers' income. Using government and micro-financial institutions to enhance farmers' incomes, the study aids policymakers in formulating relevant policies.