An Analysis of Outreach and Sustainability Profitability of Credit Union in East Nusa Tenggara

Abstract

This research study aims to analyze: (1) whether outreach influences the sustainability (profitability) of credit unions; (2) the impact of taxes and operational costs on outreach and sustainability; and (3) the impact of assets on outreach and sustainability. It fills a gap in the literature by examining the relationship between outreach and sustainability in credit unions in East Nusa Tenggara, incorporating taxes, operational costs, and assets as key determinants. Data were collected via documentation and analyzed using treatment regression. The study employs six-year panel data econometrics (2016–2021) from the financial statements of 99 credit unions in East Nusa Tenggara. First, a trade-off exists between outreach and sustainability (profitability). Second, taxes have no significant impact on outreach or sustainability; employee and administrative costs negatively affect outreach; and interest costs negatively affect sustainability. Third, institutional assets (e.g., Mutual Protection Funds [Dapema] and technology adoption) positively impact both outreach and sustainability. Financial assets such as liabilities and stock savings positively affect both; total assets and working capital positively affect outreach; and non-stock savings positively affect sustainability.