Strengthening Agricultural Credit Performance: The Moderating Role of Credit Collateral on the Relationship Between Working Capital Loans and Bad Loan Risk in Farmer Groups

Antonius Yohanes William Timuneno
Maria Goreti Malut

Al-Kharaj: Journal of Islamic Economic and Business
Vol. 8 No. 1 (2026): All articles in this issue include authors from 3 countries of origin (Indonesi

Strengthening agricultural credit performance: the moderating role of credit collateral on the relationship between working capital loans and bad loans risk in farmer group. Purpose: This study explores how credit collateral moderates working capital loans to minimize bad loans risk among farmers. This study employes a quantitative research design using Smart PLS 4.1 as the analytical tool for inferential statistical testing. The reduced risk of non-performing loans is influenced by structured working capital system’s and significally using credit collateral. This study higlights farmer group with unstructured working capital credit schemes and seeks to reposition credit collateral as key in reducing default risk. Improving credit Effectiveness through the optimalization of credit collateral within the credit mechanism