August 13, 2025

Access to Green Financing for Rural SMEs: The Strategic Role of Banking in Promoting a Sustainable Circular Economy in Indonesia

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This analysis reveals barriers to green financing for rural SMEs, suggesting banks enhance their role in promoting sustainable credit access.

Access to green financing can enhance the growth of rural SMEs, fostering their inclusion in a circular economy.
The study highlights that only 4.5% of total bank lending currently goes to green loans, mainly benefiting large corporations.
Identifying barriers like low green-finance literacy and rigid credit scoring is crucial for improving financing options.
Banks can play a key role by adopting green instruments and collaborating with local governments and businesses.

Idris et al. (2025) studied this question.

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This analysis reveals barriers to green financing for rural SMEs, suggesting banks enhance their role in promoting sustainable credit access.