Determinants of Credit Default in the Credit Union Case Study: Credit Union Bererod Gratia, Jakarta

Abstract

The high numbers of credit default showing the distribution of credits that are not well targeted and efficient. Not on target due to credits granted to members who do not have the willingness and ability to repay the credits. Not on target due to credits granted to members who do not use it as a tool to enhance its economic potential and capabilities. This means the credit default problems will hinder the role of the Credit Union (CU) to take part in developing micro-scale enterprises. Internally, this will also disrupt the stability of the CU because it reduces the assets of CU which is a picture of the level of confidence to the CU members. This study examined the determinants of credit default of CU. The purpose of this test is to know the specific things that become the cause of the credit default. This study examined the determinants of credit default that occurred in the CU credit distribution. Case study research conducted at CU Bererod Gratia (CUBG), Jakarta. The primary data required in this study are indicators of credit analysis. Primary data was obtained by distributing questionnaires to 200 people CUBG members. The analysis was performed by using logistic regression since the logistic regression can test whether the probability of credit collectability quality (smooth or problematic) can be predicted by independent variables. The test results indicate that CUBG not able to identify customers based on their probability of credit payment. The indicators used by the credit analysis CUBG not able to produce signals that can identify customers based on their probability of credit payment. Furthermore, the test results showed that customers work, intended use of credit, collateral type of customer and customer understanding of CUBG business concepts have a significant impact on the probability of a credit default. This means that by taking into account the type of work customers, use of credit by the customer, the kind of pledged goods to customers and understanding customers’ CUBG business concept, will enhance the ability CUBG to identify customers based on their credit payments.