The Effect of Applying the Eligibility Principle in Credit Distribution to Business Actors on MSME Performance: Case Study of MSME Actors in Malang City, Indonesia

Barli Novirin

doi:10.55208/zhafbn73

Authors

Barli Novirin Fakultas Ekonomi dan Bisnis Universitas Negeri Surabaya, Indonesia Author

DOI:

https://doi.org/10.55208/zhafbn73

Keywords:

Credit Distribution, Business Performance, Malang City

Abstract

The study titled The Impact of Applying the 5C Principle in Credit Allocation to Entrepreneurs on Business Performance (Case Study of Entrepreneurs in Malang City). This study aims to analyze and identify the application of the 5C principle (Character, Capacity, Capital, Guarantee, and Conditions) in credit distribution to debtors and its impact on business performance in Malang City. This research is a quantitative analysis of the characteristics of loan distribution (5C) to entrepreneurs and their company performance. Observation, interviews gathered data, and the distribution of questionnaires to 30 respondents utilizing purposeful random sampling methods. The analysis employed linear regression and hypothesis testing. This study's findings demonstrate that credit distribution (5C) to entrepreneurs positively influences business success in Malang City. The analysis and results obtained in this study indicate several significant findings warrant attention. Specifically, credit distribution may serve as a foundation for enhancing business performance in Malang City. Recommendations for business operators in Malang City include implementing a transparent evaluation process, providing training and education, and fostering long-term relationships with Micro, Small, and Medium Enterprises (MSMEs).

References

Abate, T. W., & Sheferaw, H. E. (2023). Micro, small and medium enterprises and their linkage with key actors in Ethiopia: developing entrepreneurial ecosystem mapping. Journal of Innovation and Entrepreneurship, 12(1), 71.

Alfharobby, W., & Prayoga, A. J. (2024). Implementation of The People's Business Credit Program on The Welfare of Micro, Small, and Medium Enterprises in Bengkulu City. Journal of Managiere and Business, 2(1), 29-42.

Husnah, H., Suparman, S., & Rauf, R. A. (2023). The role of business credit on SME performance, regional economic output, and unemployment. Research Horizon, 3(3), 151-163.

Ika, S. (2023). A SYSTEMATIC LITERATURE REVIEW ON FINANCING MICRO, SMALL AND MEDIUM ENTERPRISES (MSMES). Journal of Social Political Sciences, 4(4), 387-409.

Meak, K. A. D., Herdi, H., Diliana, S. M., & Kolit, Y. A. D. D. (2024). Analysis of the Effectiveness of Credit Granting Procedures in the Homestay Business Sector Fostered by KSP Kopdit Obor Mas. Neo Journal of economy and social humanities, 3(4), 297-309.

Murizal, I., Soemitra, A., & bi Rahmani, N. A. (2025). Strategies for Accelerating MSME Financing Distribution at Bank Aceh in Compliance with Aceh Qanun No. 11 of 2018. Pena Justisia: Media Komunikasi dan Kajian Hukum, 24(1), 225-242.

Olusegun, B. O., & Festus, A. F. (2023). Effect of Income Determination, and Recognition on Financial Performance of Profit-Making Organizations in Nigeria with Focus on MSME. Open Access Library Journal, 10(8), 1-20.

Partini, S. T. (2024). Examining the Implementation of Digital Marketing Strategies through the 4P Framework at a Trading Enterprise in Subang Regency, West Java. Majalah Bisnis & IPTEK, 17(2), 191-203.

Patmasari, E. K., & Arija, H. H. (2023). Implementation Of the People's Market Application to Improve the Performance of MSMES In Kendal Regency: Integration of Theory Acceptance Model (TAM) And Extended Theory of Planned Behavior (TPB). Jurnal Ekonomi, Bisnis & Entrepreneurship, 17(2), 513-523.

Ramadan, M. H., Subagja, R. I., Suherman, A., & Ramlan, I. (2024). Application Design of Stock Inventory of Meatball Serving Ingredients for Anhel MSME Bakso. Majalah Bisnis & IPTEK, 17(1), 91-96.

Sahoo, P. B. B., & Thakur, V. (2023). Enhancing the performance of Indian micro, small and medium enterprises by implementing supply chain finance: challenges emerging from COVID-19 pandemic. Benchmarking: An International Journal, 30(6), 2110-2138.

Sari, M., & Fitriani, W. (2024). MICROCREDIT FINANCING IN IMPROVING THE DEVELOPMENT OF SMALL AND MEDIUM MICRO ENTERPRISES (MSMEs). Management, 2(2), 229-240.

Sirait, R. U., Sudirman, L., & Disemadi, H. S. (2024). Legal Protection for Banking Institutions in Small and Medium Enterprise Credit Agreements. SIGn Jurnal Hukum, 6(2), 468-481.

Suryawati, D., Hidayah, N., & Rohman, H. (2024). Thinking Across Capability Model for Accessibility of People's Business Credit (KUR) Capital for Micro Business Actors. Policy & Governance Review, 8(1), 19-34.

Utama, H. (2025). An Analysis of Business Loans on the Payment of Micro, Small and Medium Enterprises (MSME) Loans. Jurnal Multidisiplin Sahombu, 5(03), 273-285.