Frontiers in Sustainable Food Systems (Dec 2024)
Leveraging financing technology for sustainable fresh agricultural products financing in Indonesia
Abstract
Financial technology (fintech) offers farmers the prospect of getting other sources of finance apart from financial assistance from the established official funding institutions. Farmers of fresh agricultural products (FAP) in Indonesia received financial offers from various fintech platforms. However, several platforms have failed to maintain their operations, resulting in negative consequences for the farming activities. This study’s objective is to explore how fintech contributes to the sustainability of FAP by examining five key dimensions of sustainability: economic, social, environmental, technological, and institutional. Most extant literature primarily examines the determinants that impact an individual’s interest in fintech lending. However, the existing research needs to dedicate more attention to the sustainability of the platform and the enterprises it finances, with a particular emphasis on the FAP sector. A quantitative methodology was utilized to design the study, and a proportional stratified random sampling method was employed to select 269 FAP producers as respondents. The data were analyzed using the multidimensional scaling (MDS) approach in rap-Agrifin using factors specifically designed to assess fintech sustainability in agribusiness. Fintech in the FAP supply chain is classified as quite sustainable, according to this study’s multidimensional finding. Partially, the dimensions that acquire sufficiently sustainable value are the social, economic, and environmental dimensions, but the technological and institutional dimensions are less sustainable. This research demonstrates that the MDS approach in rap-Agrifin can effectively analyze sustainable finance in agriculture, highlighting the need for focused improvement on institutional and technological factors, particularly through the application of fintech.
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