The Role of Microfinance in Public Sector Welfare Policies: A Sustainable Finance Perspective Using Orange Data Mining

Abstract

Purpose: This study examines the role of Grameen Bank-inspired microfinance institutions (MFI) in public sector welfare policies, with a specific focus on the Mumpuni Cooperative in Indonesia. The study further explores how microfinance contributes to business growth, economic stability and sustainable financial decision-making, particularly in low-income and rural communities where access to formal banking remains limited. Design/methodology/approach: This study employs a qualitative computational approach using Latent Dirichlet Allocation (LDA) analysis through the Orange Data Mining platform. Data were collected from 30 microfinance clients, who were qualified as active and productive borrowers, along with institutional representatives from Grameen Bank-based MFIs. The study follows a three-stage process: data collection, preprocessing, and topic modeling, to systematically identify dominant topics related to microfinance and public sector welfare policies. Findings: The findings emphasize how microfinance supports business growth, facilitates economic stability, and promotes sustainable financial decision-making among entrepreneurs. LDA analysis reveals the deep integration of microfinance with local economic sectors, driving the development of MSMEs, financial inclusion, and welfare, while fostering entrepreneurship, social mobility, and poverty alleviation under supportive public policies for sustainable growth. Research limitations/implications: Although limited to a single region, this study provides a data-driven perspective on the role of microfinance in shaping social and economic policies. Future research should investigate AI-driven financial inclusion models and evaluate the long-term sustainability of microfinance interventions within public finance strategies. This study conceptualizes microfinance as an integrated tool that links sustainable finance, welfare policies, and social inclusion, while urging cooperative leaders to foster cross-sector collaboration, community governance, and financial literacy among marginalized women entrepreneurs to achieve sustainable inclusion. Originality/value: This study bridges the gap between microfinance and public sector financial policies by providing empirical insights into how microfinance complements fiscal and social policies. This study contributes a methodological novelty by employing a qualitative approach enhanced with Orange Data Mining, enabling the systematic discovery of hidden patterns and the identification of dominant topics within qualitative data.