THE ROLE OF COOPERATIVES IN THE SMES EMPOWERMENT IN RURAL AREAS

Purpose: This study aims to analyze the role of Mitra Dhuafa Cooperative in Gemolong Sub-district of Sragen, Indonesia, in empowering rural microenterprise, and to analyze its success rate by measuring the correlation between micro financing and the level of capability, and poverty alleviation. Methodology: The method used in this study is quantitative analysis. The data collection was obtained through a survey by distributing questionnaires to 100 members of Mitra Dhuafa Cooperative. The data was analyzed using Somers'd Correlation Test, with Statistical Package for Social Science (SPSS) software. Main Findings: The result of data analysis shows a positive relation (0.320) between the level of capability of micro business actors and poverty alleviation. The Indicators of empowerment success were measured by Amartya Sen's capability indicators, namely, opportunities and access in the economic, social, health, education, openness, and security fields. The research concludes by stating that Mitra Dhuafa Cooperative has succeeded in reducing the level of poverty by increasing the capability, bargaining power and independence of micro business actors. Applications: This study can be useful for implementing poverty alleviation program and Islamic microfinance programs in rural areas. Novelty/Originality: The combined implementation of Grameen Bank model and Sen’s capability approach to analyze its success for poverty alleviation in rural areas