Financial Development

Indonesia grapples with a pronounced financial inclusion deficit, particularly among Micro, Small, and Medium Enterprises (MSMEs), as evidenced by a substantial financing gap. Many MSMEs struggle to obtain financing due to the “missing middle” phenomenon, being too large for microfinance institutions yet too small and risky for formal financial institutions. Indonesian MSMEs encounter a multifaceted array of obstacles, including overreliance

This policy paper is the first of eight series derived from the “Financial Development for Strong and Equitable Growth” white paper, launched in February 2024. Each paper examines key issues of financial development using the components of the Financial Development Index developed by the IMF, which focuses on three critical elements: depth, access, and efficiency. These papers propose targeted strategies

Initial report from IBC’s research “Financial Development for Strong and Equitable Growth”