The Role of Information Technology in Reducing the Risk of Rural Microcredit to Strengthen the Local Economy Didit Welly Udjianto, Sri Rahayu Budi Hastuti, Hani Subagio, Bagus Muhammad Akbar, Maulana Rifki Wardana
UPN Veteran Yogyakarta
Abstract
This article aims to fill this gap by exploring the various risks associated with rural microcredit including the role of information technology in credit risk management and its impact on local economies. The main objectives are to identify the key risks faced by rural borrowers, assess how these risks affect economic activities in rural areas, and propose strategies to mitigate these risks based on economic and technological aspects. This article investigates whether microcredit risks, such as default rates and inadequate financial literacy, hinder economic growth in rural areas. The study findings demonstrate the importance of mitigating microcredit risks for local economic sustainability. The study highlights the complexity of microcredit programs and provides policy recommendations to improve their effectiveness and sustainability. Effective policy recommendations include the incorporation of financial literacy training, the implementation of robust risk management practices, the customization of financial products to the specific needs of rural borrowers, and reliable information systems.
Keywords: rural microcredit, local economy, microfinance risks, information technology
