THE ROLE OF COMMUNITY FINANCIAL INSTITUTIONS IN STRENGTHENING GRASSROOTS ECONOMIC STABILITY

Abstract

This article presents the role of community financial institutions in strengthening grassroots economic stability, serving as a crucial mechanism in the development of the grassroots economy. These institutions play a key role in promoting savings, providing loans, and offering financial welfare services through community-based management. The operational process begins with selecting well-prepared funds, conducting training, and certifying standards to develop stable organizations capable of effectively meeting the needs of the people. The dynamics of community financial institutions are reflected in the process of enhancing grassroots economic stability by fostering economic networks through collaboration within the community and with external agencies. These institutions support financial literacy, investment, and fund management. Additionally,they integrate cultural capital by promoting local products to add value and stimulate the creative economy. Community funds thus serve as essential tools for economic, social, occupational, cultural, and environmental development. They help reduce economic disparities by providing microloans, supporting sustainable agriculture, and strengthening community welfare systems. Effective financial management within the community requires clear, transparent, and verifiable regulations, along with policies that align with the principles of the sufficiency economy philosophy and the specific context of each community. Moreover, a robust financial risk management system, proper governance, and financial literacy training for members are necessary to enhance management efficiency. During economic crises, these institutions help alleviate household debt burdens through measures such as lowering interest rates, extending loan repayment periods, and providing revolving funds to support local economies. Establishing partnerships with relevant stakeholders, including public and private sectors, reinforces community financial institutions as economic hubs that empower communities to achieve long-term
self-reliance and sustainable growth.