The role of village credit institution (LPD) to realize the economic empowerment

Village credit institutions (LPD) are one of the institutional elements that manage the financial potential of a village in Bali. LPDs as microfinance institutions (IMF) are one of the effective development tools to reduce the problem of poverty due to low access to financial capital. The purpose of this research is to discover the relationship between local wisdom, the costs of detecting and social capital for the economic empowerment of people in the province of Bali. Data collected through questionnaires were analyzed using the structural equation modeling (SEM) approach based on variance or partial least squares (PLS). Based on the results of the analysis and discussion of data, it can be concluded that local wisdom and the costs of LPD analysis have a positive and significant effect on the economic empowerment of people in the province of Bali. Keywords: village credit institution (LPD), local wisdom, transaction cost, social capital, economic empowerment