Effect of Social Capital, Community Participation, and Performance of Indigenous Community Financial Institutions for Rural Development in the Province of Bali

Abstract

Strategies to build the village can not be separated from efforts to address the underlying problems experienced by rural communities including poverty and lack of access to capital. To that end, the importance of the role of financial institutions raise indigenous communities in rural areas such as Village Credit Institutions (LPD) in the province of Bali. Anchored theory and empirical facts, this study aims to answer how the direct effect of social capital on Public Participation, the direct influence of Social Capital on the Performance of the LPD, the direct influence of Social Capital on Rural Development, the direct effect of Community Participation on the Performance of LPD and the direct influence of Performance LPD against Rural development. The study also reveals how Performance LPD role in mediating the Social Capital and Community Participation to realize the success of Rural Development and Public Participation in mediating the Social Capital to increase LPD performance. By surveying 229 credit customers LPD in 113 villages, as well as with data analysis techniques guided by software Smart PLS 3.0, find: direct Social Capital a significant effect on Public Participation, directly Social Capital and Participation communities significant effect on performance LPD, directly Social capital is not a significant effect on Rural Development, and live performance LPD significant effect on Rural Development. Mediated by Community participation, social capital LPD significant effect on performance. With Performance mediated by LPD, Public Participation significant effect on Rural Development. Mediated by LPD Performance and Participation, Social Capital significant effect on Rural Development. In this case, the LPD Performance and Participation perfectly capable of mediating the effect of social capital on rural development, so the LPD performance is recognized as a key mediator in realizing the success of Rural Development in Bali Province.

Keywords: performance, social capital, community participation, rural development