FINANCIAL LITERACY: AN ESSENTIAL IN SMALL MEDIUM ENTREPRISES (SMEs) PERFORMANCE

Abstract

This study aims to examining the effect of financial literacy on the performance of Small and Medium Enterprises (SMEs) in Malang. This explanatory study was conducted in Sukun District, Malang City. The population was SMEs that located in Sukun District, Malang City which were selected using proportionate stratified random sampling with the total number of 220 samples. The study used descriptive quantitative design with primary data as the data source. The data was analyzed using Smart Partial Least Square (PLS) 3.3 Version with hypothesis tested using Bootstrap. The results of this study indicate that: 1) the financial literacy of the SMEs in Sukun District, Malang City was at a good literacy level which is Sufficient Literate; 2) the Small and Medium Enterprises in Sukun District has a good level of business performance; and Analysis of Smart PLS shows that financial literacy has a positive and significant effect on the performance of Small and Medium Enterprises in Sukun District, Malang. Therefore, financial literacy of the business owner has an important role in business performance. financial literacy can help business actors to gain adequate financial knowledge and capabilities in preparing their business financial strategies and improving their business performance

A Conceptual Framework Of Entrepreneurial Orientation, Financial Literacy, And MSMEs Performance: The Role Of Access To Finance

“…Finance Literacy and MSME Performance (Mabula & Ping, 2018); (Wijayanto et al, 2020); (Satiti, 2020); (Kulathunga, Ye, Sharma, & Weerathunga, 2020); (Utami, Aprilia, & Putra, 2021); (Nakita Gusman, Subiakto Soekarno, 2021); (Buchdadi et al, 2020) 5…”

“…One of the most important aspects of financial inclusion is financial literacy (Hasan, Le, & Hoque, 2021) highly educated, as well as increasing the number of people who utilize financial goods and services. The owner's financial literacy has a significant impact on MSME success (Satiti, 2020). Financial literacy helps business owners prepare the business's financial strategies, improve business performance, and acquire the right financial knowledge and skills to maintain sustainability.…”

Does Financial Behavior Mediate The Relationship Between Financial Literacy and Financial Experience Towards Financial Performance of Small Businesses?

“…According to Anggraeni (2015), lowincome MSME owners' financial literacy may impair their ability to manage their funds. Menike (2019); Sanistasya, Raharjo, & Iqbal (2019); Satiti (2020) found evidence that financial literacy can improve company performance.…”

Relationship of financial literacy and financial performance to business sustainability

“…Thus, the results of this evaluation provide evidence that the information contained in the data of 38.2 percent can be explained by the model, while the remaining 61.8 percent is explained by errors and other variables not included in the model. The following is a picture of the empirical research model: The results of the path coefficient validation test on each path for direct effects can be presented in Satiti (2020). The results of the analysis obtained can be explained that the better financial literacy, the better the financial performance of MSMEs.…”

“…Financial literacy can affect a person's way of thinking about the financial condition of MSMEs and strategically in making financial decisions, so that business owners can manage finances well. Good financial management skills are required by MSMEs or to improve their business performance (Satiti, 2020). Financial literacy has three components, namely financial knowledge is the knowledge or basic knowledge of individuals in determining financial decision-making, financial attitude is the attitude or state of mind of individuals in determining financial decision-making, and financial behavior is individual behavior towards financial management.…”