Integrating Local Wisdom and Financial Culture on Poverty Alleviation: Evidence from Amungme and Kamoro Communities in Mimika Regency

The increasing poverty rate in Mimika Regency indicates that abundant natural resource wealth has not significantly improved the welfare of indigenous communities, particularly the Amungme and Kamoro tribes. This condition highlights the limitations of conventional development approaches that primarily emphasize economic growth while neglecting local socio-cultural values. Therefore, a more inclusive and sustainable development strategy that integrates local wisdom with adaptive financial practices is urgently needed. This study aims to analyze the effect of local wisdom on poverty alleviation and to examine the mediating role of financial culture in this relationship. The research employed a quantitative explanatory approach. Data were collected from 100 respondents from the Amungme and Kamoro communities using purposive sampling techniques and analyzed through Structural Equation Modeling–Partial Least Squares (SEM-PLS). The findings reveal that local wisdom has a positive and significant effect on financial culture but does not directly influence poverty alleviation. In contrast, financial culture has a positive and significant effect on poverty alleviation and significantly mediates the relationship between local wisdom and poverty alleviation. These findings suggest that the socio-cultural values embedded in local wisdom can contribute more effectively to community welfare when transformed into adaptive and healthy financial practices. This study emphasizes the importance of strengthening culturally based financial culture as a strategy for promoting inclusive, participatory, and sustainable poverty alleviation among indigenous communities living in extractive industry regions. The study also contributes to the literature on cultural finance and indigenous community development in resource-rich areas.