Interest Rate Policy and MSME Credit Growth in the Era of Digital Financial Inclusion: Panel Data Analysis

Micro, Small, and Medium Enterprises (MSMEs) play a vital role in the Indonesian economy.However, they still face significant barriers to accessing financing, primarily due to fluctuations in interest rates and low digital financial inclusion.This study aims to analyze the impact of interest rate policy on the growth of MSME credit in the context of digital financial inclusion.Using a quantitative approach with the panel data method, this study analyzed secondary data from 34 provinces during the 2018-2023 period obtained from Bank Indonesia, OJK, BPS, and AFTECH.The panel regression models used include the Pooled Least Squares, Fixed Effects Model, and Random Effects Model, with the best model selected through Chow, Hausman, and Lagrange Multiplier tests.The results of the study show that interest rate policy has a significant negative impact on the growth of MSME loans ( = -0.223;p < 0.01).However, digital financial inclusion was found to positively moderate this relationship ( = 0.101; p < 0.05), indicating that financial digitalization can enhance the resilience of MSMEs to tight monetary policies.Disparities between regions in terms of digital inclusion also affect the elasticity of MSME loans to interest rates.These findings highlight the importance of synergy between monetary policy and digital financialization strategies to promote even growth of MSMEs across Indonesia.