Fostering poverty reduction through ultra-microfinance interventions for agricultural MSES in Indonesia: The role of business size and gender

Studies on the role of gender, family businesses, and non-family businesses in examining financial management practices, particularly in developing countries, have been largely overlooked. This research, based on the collaboration between Positive Accounting Theory (PAT) and Agency Theory, aims to explore the intervention of microfinance in micro and small agricultural enterprises (MSEs). Using a quantitative approach, the study employs the Structural Equation Model Partial Least Square (SEM-PLS) method with a sample size of 656 respondents, comprising ultra-micro and small business actors in the agricultural sector in Indonesia. The findings indicate that for micro-sized businesses, entrepreneurial success mediates the relationship between microfinance and subjective wellbeing, while in small-sized businesses, poverty reduction and entrepreneurial success fully mediate the relationship between ultra-microfinance and subjective wellbeing. Ultra-microfinance assists business owners in enhancing their financial resource capacity more easily. On the other hand, microfinance not only provides financial access but also offers training and mentorship programs, helping business owners achieve long-term success. The study also reveals that gender does not mediate the relationship between microfinance and subjective wellbeing. Gender inequality in accessing resources, differences in decision-making participation, and social norms that still limit women's roles in economic activities within the agricultural sector are contributing factors. The implication of this study is to provide insights for decision-makers in the agricultural MSME sector to enhance subjective wellbeing. It is hoped that poverty alleviation programs through microfinance initiatives, such as PNPM, can be optimally absorbed and have a positive impact on empowering business owners to reduce structural poverty, especially in the key sector of agricultural businesses.