Innovation in Financing Coastal Village Development through Community-Owned Microfinance Institution: A Case Study of Village Credit Institution (LPD) Kedonganan Bali

Microfinance institutions (MFIs) is a worldwide movement. This study aims to describe the key conditions in the rapid development of community-owned MFIs, namely LPD (Lembaga Perkreditan Desa/ Village Credit Institution), through case study in LPD Kedonganan Village, Badung Regency of Bali. This village was selected for few reasons i.e. the shifting of people livelihood from fishery-based to tourism-related livelihood, the well-manage of coastal commons for fishery, tourism spot, and religious-related activities. Data collection was conducted through several visits during 2007 to 2018. This research adopted qualitative approach through observation and depth-interview with local leaders, MFI managers and users to discover their perspective about the MFI. Secondary data was also collected from various reports of LPD Kedonganan. The study showed that LPD was established, owned, and managed by the community through a custom village. LPD distributed credits to various components of the society and business including tourism and fisheries-related business, in and out of village territory, and to male and female customers, with various types, scales, and sectors. The healthy financial performance of the institution was clearly depicted by its rapidly growing profit and equity, and its low percentage of a non-performing loan for more than three decades. The better growing LPD has attracted various socio-economic investments in the grass root, for example a collective-owned and managed seafood restaurant. Overall, the study identified that the community had made such successful and sustainable collective-owned resource arrangement. The arrangement had been evolved and built by sharing rules linked to community values, customs and faith. As a result, the emerging institutions had contributed remarkable roles to rural socio-cultural and economic development and showed the opportunity to enhance some cooperative behaviors for sustainable governance of resources and rural livelihood.