Debt-to-Income Ratio and Financial Vulnerability of Rural Households: Evidence from Weekly Microfinance Practices in Boawae District, Nagekeo Regency
DOI:
https://doi.org/10.5281/zenodo.20482330Keywords:
Debt-to-Income Ratio, Financial Vulnerability, Microfinance, Rural HouseholdsAbstract
The proliferation of weekly microfinance known as "koperasi mingguan" in rural areas provides quick credit access but introduces severe financial risks for rural households. This study aims to analyze the Debt-to-Income (DTI) ratio, determine financial vulnerability levels, and identify the key factors driving financial distress across 7 villages in Boawae District, Nagekeo Regency. Using a quantitative descriptive and inferential approach, data from 149 rural households were analyzed using descriptive statistics and Ordinary Least Squares (OLS) regression via SPSS. The empirical results reveal a critical situation: the average DTI ratio across the sub-district reaches 89.35%, and 68.46% of surveyed households suffer from structural financial deficits. Spatially, Rowa, Raja Selatan, and Gerodhere villages face severe debt traps with average DTI ratios exceeding 100%. Furthermore, regression analysis confirms that the number of weekly cooperatives joined is the single most significant factor undermining household financial health (β = 41.436, p = 0.000), meaning every additional cooperative membership spikes the DTI ratio by 41.44%. Occupationally, casual laborers and weavers suffer from the highest financial vulnerability. This study implies that local governments must implement stricter regulations on informal micro-lending and initiate gender-responsive financial education in rural Nagekeo.
Downloads
References
Akhter, J., & Cheng, K. (2020). Sustainable empowerment initiatives among rural women through microcredit borrowings in bangladesh. Sustainability (Switzerland), 12(6). https://doi.org/10.3390/su12062275
Altundere-Dogan, M. B. (2025). The Role of Personality Traits on Intra-Household Financial Decision-Making and Household Debt. Journal of Family and Economic Issues, 46(2). https://doi.org/10.1007/s10834-025-10045-9
Dunn, L. F., & Mirzaie, I. A. (2016). Consumer debt stress, changes in household debt, and the great recession. Economic Inquiry, 54(1). https://doi.org/10.1111/ecin.12218
Frigerio, M., Ottaviani, C., & Vandone, D. (2020). A meta-analytic investigation of consumer over-indebtedness: The role of impulsivity. International Journal of Consumer Studies, 44(4). https://doi.org/10.1111/ijcs.12570
Ganong, P., & Noel, P. (2020). Liquidity versus wealth in household debt obligations: Evidence from housing policy in the great recession. American Economic Review, 110(10). https://doi.org/10.1257/aer.20181243
Haijun, W., Xin, L., Jianshuo, W., Guoyang, C., & Rijimoleng, S. (2025). A Review of Research on Household Debt Risk: Measurement, Causes, and Impact. In Journal of Economic Surveys. https://doi.org/10.1111/joes.70030
Hamid, F. S. (2025). Behavioral biases and over-indebtedness in consumer credit: evidence from Malaysia. Cogent Economics and Finance, 13(1). https://doi.org/10.1080/23322039.2024.2449191
Haq, W., Ismail, N. A., & Satar, N. H. M. (2018). Household debt in different age cohorts: A multilevel study. Cogent Economics and Finance, 6(1). https://doi.org/10.1080/23322039.2018.1455406
Hiilamo, H. (2021). The legacy of economic recession in terms of over-indebtedness: A framework and review of the evidence. Social Policy and Society, 20(1). https://doi.org/10.1017/S1474746420000354
Iqbal, Z., Rao, Z. U. R., & Akram, M. (2025). From credit to crisis: the impact of distress-driven and opportunity-driven multiple borrowing on loan repayment. Journal of Economic and Administrative Sciences. https://doi.org/10.1108/JEAS-02-2025-0114
Kamran, S., & Uusitalo, O. (2024). How informal financial service institutes facilitate the financial inclusion of low-income, unbanked consumers. International Journal of Bank Marketing, 42(6). https://doi.org/10.1108/IJBM-03-2023-0148
Kasoga, P. S., & Tegambwage, A. G. (2021). An assessment of over-indebtedness among microfinance institutions’ borrowers: The Tanzanian perspective. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.1930499
Katnic, I., Katnic, M., Orlandic, M., Radunovic, M., & Mugosa, I. (2024). Understanding the Role of Financial Literacy in Enhancing Economic Stability and Resilience in Montenegro: A Data-Driven Approach. Sustainability (Switzerland), 16(24). https://doi.org/10.3390/su162411065
Kim, J., Gutter, M. S., & Spangler, T. (2017). Review of family financial decision making: Suggestions for future research and implications for financial education. Journal of Financial Counseling and Planning, 28(2). https://doi.org/10.1891/1052-3073.28.2.253
Latumahina, O., Faley, H. G., & Sanga, M. H. (2026). Analisis Faktor-Faktor yang Memengaruhi Intensi Penggunaan Peer-to-Peer Lending dengan Kemudahan sebagai Variabel Moderasi pada UMKM di Kota Kupang. Jurnal Ilmiah Akuntansi Dan Humanika, 16(1), 13–25.
Lee, J. M., & Kim, K. T. (2016). Assessing Financial Security of Low-Income Households in the United States. Journal of Poverty, 20(3). https://doi.org/10.1080/10875549.2015.1094773
Martín-Legendre, J. I., & Sánchez-Santos, J. M. (2024). Household debt and financial vulnerability: empirical evidence for Spain, 2002–2020. Empirica, 51(3). https://doi.org/10.1007/s10663-024-09617-z
Mikuš, M. (2019). Contesting household debt in Croatia: the double movement of financialization and the fetishism of money in Eastern European peripheries. Dialectical Anthropology, 43(3). https://doi.org/10.1007/s10624-019-09551-8
Milana, C., & Ashta, A. (2020). Microfinance and financial inclusion: Challenges and opportunities. Strategic Change, 29(3). https://doi.org/10.1002/jsc.2339
Mishra, D., Kandpal, V., Agarwal, N., & Srivastava, B. (2024). Financial Inclusion and Its Ripple Effects on Socio-Economic Development: A Comprehensive Review. In Journal of Risk and Financial Management (Vol. 17, Number 3). https://doi.org/10.3390/jrfm17030105
Murshed, M. (2022). Pathways to clean cooking fuel transition in low and middle income Sub-Saharan African countries: The relevance of improving energy use efficiency. Sustainable Production and Consumption, 30. https://doi.org/10.1016/j.spc.2021.12.016
Nchor, J. U. (2023). Livelihood Strategies and Their Determinants among Informal Households in Calabar, Nigeria. Sustainability (Switzerland), 15(4). https://doi.org/10.3390/su15042855
Pinjisakikool, T. (2018). The Influence of Personality Traits on Households’ Financial Risk Tolerance and Financial Behaviour. Journal of Interdisciplinary Economics, 30(1). https://doi.org/10.1177/0260107917731034
Sanga, M. H. (2026). Social Capital and Entrepreneurial Orientation on Micro-business Performance: A Study on Business Actors in East Nusa Tenggara. Journal of Business, Accounting and Information Technology, 1(1), 42–52. https://doi.org/10.5281/zenodo.18665486
Sanga, M. H., Situmorang, R., & Hale, K. D. (2026). The Effectiveness of KIP-Kuliah Scholarships on Student Academic Achievement in NTT Province: A Dual-Process Theory Approach to Financial Behavior and Social Environment. International Journal of Social Learning (IJSL), 6(2), 439–456. https://doi.org/10.47134/ijsl.v6i2.558
Santoso, D. B., Gan, C., Revindo, M. D., & Massie, N. W. G. (2020). The impact of microfinance on Indonesian rural households’ welfare. Agricultural Finance Review, 80(4). https://doi.org/10.1108/AFR-11-2018-0098
Situmorang, R., & Sanga, M. H. (2024). Effectiveness of BRILink service in enhancing financial inclusion and wellbeing in East Nusa Tenggara. In Mantik Journal (Vol. 8, Number 2). Online. https://doi.org/https://iocscience.org/ejournal/index.php/mantik/article/view/5438
Sutiyo, Pitono, A., Raharjanto, T., & Sinaga, J. B. B. (2020). Woman Microfinance in Indonesia: Present Status and Future Direction. International Journal of Rural Management, 16(1). https://doi.org/10.1177/0973005219898922
Tehulu, T. A. (2023). What drives microfinance institution lending behavior? Empirical evidence from Sub-Saharan Africa. International Journal of Emerging Markets, 18(8). https://doi.org/10.1108/IJOEM-08-2020-1002
Ullah, I., & Khan, M. (2017). Microfinance as a tool for developing resilience in vulnerable communities. In Journal of Enterprising Communities (Vol. 11, Number 2). https://doi.org/10.1108/JEC-06-2015-0033
Ybrayev, Z., Talakin, A., Kairullayev, Y., & Zharkynbay, T. (2024). Household debt service ratio in a developing economy: borrower-based analytical tools and macroprudential policy overview in Kazakhstan. Journal of Banking Regulation, 25(1). https://doi.org/10.1057/s41261-023-00218-7
