DEVELOPING A COOPERATIVE SYSTEM TO ENHANCE FINANCIAL INCLUSION

Abstract

Objectives of this research were: 1. To study inequality and financial gap among financial institution and in cooperative system and 2. To study the guidelines for the development of the cooperative system that will help to solve the financial cooperative system inequality problem, in order to enhance poor people’s access to financial services.This research used qualitative methodology, by reviewing study and research of financial institutions landscape, the role of financial institutions, the role of cooperative financial institutions. Those data were gathered and synthesized from textbooks, articles, research papers, government documents and related laws, discussions, group discussions, information from meetings in which author had served as a committee, working group, or had participated in the operation, interviews stakeholders of the research subjected, including financial experts. Cooperative executive, cooperative staffs, cooperative experts and participation. Using those data to formulate policies to reduce financial inequality between liquidity surplus and underfunded cooperatives as well as activities that will lead to the formulation of guidelines for the development of the cooperative system to reduce financial inequality and help poor people access more financial services.

This research results revealed that problem was caused from the structure of cooperative systems which is each cooperative were founded by a combination of members with the same attributes, occupations, and incomes and resulting in a level of income and the need for capital. Therefore, it is necessary to establish a new type of cooperative financial institution as a cooperative financial center. This research provided a proposal for the concept of a cooperative financial center which has elements of transaction format, risk management, appropriate, good governance, by compiling with cooperative principles, risks to the financial system and in line with other financial institutions with similar characteristics.