Determinants of discouraged borrowers and gender as contextual factors: evidence from Indonesian MSMEs

This study aims to examine the effect of application costs, trust reciprocity, and self-efficacy on discouraged borrowers and the role of gender as a moderating variable. Our sample was 356 micro, small, and medium enterprise actors in the manufacturing industry in Central Java Province, Indonesia. The data was analyzed using the covariant-based structural equation modeling method. The results demonstrated that application costs, trust reciprocity, and self-efficacy significantly affect discouraged borrowers. However, the contextual role of gender is not fully proven because it can only weaken the self-efficacy effect of discouraged borrowers. This study enriches the literature by proposing discouraged borrowers from a demand factor perspective. In addition, it also offers policy suggestions for the banking industry to collaborate intensively with other stakeholders to increase banking digital literacy and build capacity to foster mutual trust and self-efficacy among micro, small, and medium enterprise actors.