Investigating the Key Criteria for Micro Loan Provider Selection: The Case of the Poor in Kedungjati, Indonesia

The potential of micro loan products to reduce poverty has received wide acclaim in the literature. Nonetheless, some critics question whether these products have truly met the needs of the poorest of the poor i.e., ‘Bottom of the Pyramid’ (BOP) customers. This paper argues that one factor contributing to any such failure in delivery is that formal micro finance institutions, such as commercial banks, non-government organizations and cooperatives, as well as informal traditional moneylenders, all suffer from a lack of basic marketing information about the BOP market. More specifically, in this case, the question is what is it that drives customers to select one micro loan product provider over another. In response, results from this study highlight that among others it is the institutional characteristics associated with image and reputation that are of paramount importance. These issues and related considerations are discussed in this paper.