The Role of MSMEs and Financial Institutions in Economic Performance: A Development Strategy in West Java

Isep Amas Priatna; Dian Anggraeny Rahim

doi:10.61255/jeemba.v4i5.1795

Authors

Isep Amas Priatna Universitas Pamulang, Pamulang, Indonesia
Dian Anggraeny Rahim Universitas Darma Persada, Jakarta, Indonesia

DOI:

https://doi.org/10.61255/jeemba.v4i5.1795

Keywords:

ANP, Development strategies, Financial institution, MSMEs, Regional economic performance

Abstract

Purpose - Micro, Small, and Medium Enterprises (MSMEs) play a pivotal role in Indonesia's economy. The purpose of this study is to examine the influence of micro, small, and medium enterprises (MSMEs) and financial institutions on regional economic performance, and to formulate strategies for MSME development in West Java.

Design/methodology/approach - The data employed are secondary data from 2019–2025, analyzed using panel data regression. Meanwhile, MSME development strategies were examined using the Analytical Network Process (ANP), which involved seven respondents: three MSME actors, three regional development planners, and one academician.

Finding/Results - The findings reveal that cooperative capital, the number of banks, and the number of MSMEs have significant positive effects on GDP per capita, whereas the number of cooperatives does not. In relation to unemployment and poverty, the number of cooperatives, cooperative capital, and the number of MSMEs have a significant negative effect, while the number of banks is not. For the ANP objectives, four criteria are identified: strengthening the institutional capacity of MSMEs, optimising the role of financial institutions, optimising the role of cooperatives, and enhancing the capacity of MSME actors.

Originality/Value - Furthermore, MSME development in West Java is characterized by two principal strategies: the government's establishment of a specialized supervisory institution for MSMEs and the formulation of an action plan to strengthen financial inclusion.

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