Village Fund Governance, Cooperative Readiness, and Inclusive Rural Welfare: Micro-Institutional Evidence from North Sumatera, Indonesia
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2026-09-14Downloads
Abstract
This study examines how Perceived Village Fund Governance (PVFG) shapes Cooperative Readiness (CR) and Inclusive Rural Welfare (IRW) among rural households in North Sumatera, Indonesia, and whether Cooperative Readiness mediates the governance–welfare relationship. Drawing on household-level survey data (n = 343) from villages receiving Village Fund transfers under Indonesia's Village Law No. 6/2014, the study employs Partial Least Squares Structural Equation Modeling (PLS-SEM). The measurement model demonstrates adequate reliability and validity across all three reflective constructs. Structural estimation reveals that PVFG exerts a strong positive influence on CR (β = 0.663, f² = 0.785) and a significant direct effect on IRW (β = 0.397), while CR positively influences IRW (β = 0.370). The indirect effect of PVFG on IRW via CR is statistically significant (β = 0.245, VAF = 38.19%), confirming partial mediation. PLSpredict results indicate medium out-of-sample predictive power. These findings establish Cooperative Readiness as a substantive meso-level mechanism through which village fiscal governance translates into household-level inclusive welfare, complementing the well-documented direct governance–welfare channel. The study contributes micro-institutional evidence to the decentralization, cooperative, and inclusive development literatures, and offers actionable guidance for Village Fund reform in Indonesia.
Keywords:
Village Fund governance cooperative readiness inclusive rural welfare fiscal decentralization Indonesia North SumateraReferences
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