ABSTRACT
Microfinance has been widely used to alleviate poverty in rural areas. A comprehensive understanding of the determinant factors applicable to microfinance sustainability is required for the effective implementation of this type of finance in rural areas. This study aimed to contribute to the development of microfinance models and policy formulation in order to alleviate poverty in rural communities in East Sumba. Researchers collected data from a sample of 100 microfinance stakeholders through questionnaires distributed to community leaders, several nongovernmental organizations, and locals. The quantitative method with partial least square was applied to analyze the data. The findings showed that social, economic, and environmental factors affect microfinance practice in rural areas. Local wisdom serves as the driving force for the sustainability of microfinance. From a microfinance policy perspective, it is imperative to take into account the various factors that determine microfinance practices since a culture-based microfinance development strategy may be an alternative for local governments to consider.
