Financial technology adoption on MSMEs sustainability: The mediating role of financial literacy and financial inclusion
DOI:
https://doi.org/10.31328/jsed.v7i2.5258Keywords:
financial inclusion, financial technology, MSME sustainability, SEM-PLSAbstract
This research examines how the adoption of financial technology impacts the sustainability of Micro, Small, and Medium Enterprises (MSMEs), emphasizing the intermediary roles of financial literacy and financial inclusion. A random sample of 288 MSME owners was chosen from the 1,020 members participating in the business legality assistance program by the Bojonegoro Regency Cooperative and MSME Service. Out of these, 247 owners fully completed the survey, providing data for the research. Data analysis utilized Structural Equation Modeling-Partial Least Squares (SEM-PLS). The results indicate that although the adoption of financial technology positively influences MSME sustainability, the impact is relatively modest. However, financial literacy and financial inclusion considerably enhance this relationship, with financial literacy exhibiting a stronger mediating effect. These outcomes highlight the importance of specific financial literacy initiatives and better access to financial services to promote the sustainable growth of MSMEs.JEL Classification L21; L26; O15References
Al-Hanakta, R., Hossain, M. B., Pataki, L., & Dunay, A. (2023). Eco-innovation influence on business performance in Jordanian micro, small and medium enterprises operating in the food processing sector. PLOS ONE, 18(2), e0281664. https://doi.org/10.1371/journal.pone.0281664
Alnemer, H. A. (2022). Determinants of digital banking adoption in the Kingdom of Saudi Arabia: A technology acceptance model approach. Digital Business, 2(2), 100037. https://doi.org/10.1016/j.digbus.2022.100037
Angeles, I. (2022). The Moderating effect of Digital and Financial Literacy on the Digital Financial Services and Financial Behavior of MSMEs. Review of Economics and Finance, 20(20), 505–515. https://doi.org/10.55365/1923.x2022.20.57
Anom, L., & Safii, A. A. (2022). Enhancing MSME Performance through Market Sensing Capability, Innovation Capability, and Iconic Ethnic Product Development. Jurnal Ilmu Manajemen Advantage, 6(1), 1–10. https://doi.org/10.30741/adv.v6i1.778
Cunningham, J. A., Damij, N., Modic, D., & Olan, F. (2023). MSME technology adoption, entrepreneurial mindset and value creation: a configurational approach. The Journal of Technology Transfer, 48(5), 1574–1598. https://doi.org/10.1007/s10961-023-10022-0
Danladi, S., Prasad, M. S. V., Modibbo, U. M., Ahmadi, S. A., & Ghasemi, P. (2023). Attaining Sustainable Development Goals through Financial Inclusion: Exploring Collaborative Approaches to Fintech Adoption in Developing Economies. Sustainability, 15(17), 13039. https://doi.org/10.3390/su151713039
Eniola, A. A., & Entebang, H. (2017). SME Managers and Financial Literacy. Global Business Review, 18(3), 559–576. https://doi.org/10.1177/0972150917692063
Frimpong, S. E., Agyapong, G., & Agyapong, D. (2022). Financial literacy, access to digital finance and performance of SMEs: Evidence From Central region of Ghana. Cogent Economics & Finance, 10(1), 2121356. https://doi.org/10.1080/23322039.2022.2121356
Hadar, R., & Manos, R. (2021). Government policy and financial inclusion: analyzing the impact of the Indian national mission for financial inclusion. Inclusive Financial Development, pp. 265–292. Edward Elgar Publishing. https://doi.org/10.4337/9781800376380.00018
Hair, J. F., Babin, B. J., & Anderson, R. E. (2010). Multivaraite Data Analysis. New Jersey: Prentice Hall.
Hair, J. F., G. Tomas M. Hult, Christian M. Ringle, & Marko Sarstedt. (2021). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) Third Edition (3rd Edition). California: SAGE.
Hasan, M. M., Yajuan, L., & Khan, S. (2022). Promoting China’s Inclusive Finance Through Digital Financial Services. Global Business Review, 23(4), 984–1006. https://doi.org/10.1177/0972150919895348
Javed, S., & Husain, U. (2021). Impact of Financial Factors on Social and Financial Sustainability in Banking Sector: A Mediating Role of Financial Literacy. Financial Inclusion in Emerging Markets, pp. 257–280. Springer Singapore. https://doi.org/10.1007/978-981-16-2652-4_13
Jungo, J., Madaleno, M., & Botelho, A. (2022). The Effect of Financial Inclusion and Competitiveness on Financial Stability: Why Financial Regulation Matters in Developing Countries? Journal of Risk and Financial Management, Vol. 15, p. 122. MDPI AG. https://doi.org/10.3390/jrfm15030122
Le, T.-H., Chuc, A. T., & Taghizadeh-Hesary, F. (2019). Financial inclusion and its impact on financial efficiency and sustainability: Empirical evidence from Asia. Borsa Istanbul Review, 19(4), 310–322. https://doi.org/10.1016/j.bir.2019.07.002
Lohana, S., Rashid, U. K., Zabri, S. M., & Rehman, Z. U. (2023). Performance Analysis of Industry 4.0 and Small and Medium Enterprises (SMEs) for Financial Sustainability Using Strategic Planning. 2023 Global Conference on Wireless and Optical Technologies (GCWOT), 1–9. IEEE. https://doi.org/10.1109/GCWOT57803.2023.10064655
Long, T. Q., Morgan, P. J., & Yoshino, N. (2023). Financial literacy, behavioral traits, and ePayment adoption and usage in Japan. Financial Innovation, 9(1), 101. https://doi.org/10.1186/s40854-023-00504-3
Mabenge, B. K., Ngorora-Madzimure, G. P. K., & Makanyeza, C. (2022). Dimensions of innovation and their effects on the performance of small and medium enterprises: the moderating role of firm’s age and size. Journal of Small Business & Entrepreneurship, 34(6), 684–708. https://doi.org/10.1080/08276331.2020.1725727
Martins, A., Branco, M. C., Melo, P. N., & Machado, C. (2022). Sustainability in small and medium-sized enterprises: A systematic literature review and future research agenda. Sustainability, 14(11), 6493.
Mckenzie, D., & Paffhausen, A. L. (2017). Small Firm Death in Developing Countries. Retrieved from http://econ.worldbank.org.
Meiryani, Elizabeth, J., Chang, A., & Sun, Y. (2021). The Effect of Financial and Financial Technology Literation on Financial Inclusion. Proceedings of the 2nd International Conference of Mental Health. SCITEPRESS - Science and Technology Publications. https://doi.org/10.5220/0011243200003376
Naumenkova, S., Mishchenko, S., & Dorofeiev, D. (2019). Digital financial inclusion: evidence from Ukraine. Investment Management and Financial Innovations, Vol. 16, pp. 194–205. LLC CPC Business Perspectives. https://doi.org/10.21511/imfi.16(3).2019.18
Nurwulandari, A. (2023). Analysis of the Impact of Financial Technology and Financial Literacy on MSME Business Sustainability. Lead Journal of Economy and Administration, 1(4), 92–97.
Okello Candiya Bongomin, G., & Ntayi, J. M. (2020). Mobile money adoption and usage and financial inclusion: mediating effect of digital consumer protection. Digital Policy, Regulation and Governance, 22(3), 157–176. https://doi.org/10.1108/DPRG-01-2019-0005
Otoritas Jasa Keuangan. (2021). National Strategy on Indonesian Financial Literacy (SNLKI) 2021 – 2025.
Otoritas Jasa Keuangan. (2020). Supporting MSMEs through FinTech Financial Inclusion for Supporting.
Rahayu, F. S., Risman, A., Firdaus, I., & Haningsih, L. (2023). The Behavioral Finance of MSME in Indonesia: Financial Literacy, Financial Technology (Fintech), and Financial Attitudes. International Journal of Digital Entrepreneurship and Business, 4(2), 95–107. https://doi.org/10.52238/ideb.v4i2.127
Risman, A., Ali, A. J., Soelton, M., & Siswanti, I. (2023). The behavioral finance of MSMEs in the advancement of financial inclusion and financial technology (Fintech). The Indonesian Accounting Review, 13(1), 91–101. https://doi.org/10.14414/tiar.v13i1.3213
Safii, A. A., & Rahayu, S. (2021). Human Capital and Social Capital as Determining Factors of The MSMEs Surviving Ability. Jurnal Ilmu Manajemen Advantage, 5(1), 1–9. Retrieved from https://ejournal.itbwigalumajang.ac.id/index.php/adv/article/view/659
Svirina, Anna., Appalonova, N., Garanin, D., Lukashevich, N., & Koshkin, I. (2021). Fintech developmental trends: the role and influence of sustainable digital logistics. E3S Web of Conferences, 258, 02019. https://doi.org/10.1051/e3sconf/202125802019
Thathsarani, U. S., & Jianguo, W. (2022). Do Digital Finance and the Technology Acceptance Model Strengthen Financial Inclusion and SME Performance? Information, 13(8), 390. https://doi.org/10.3390/info13080390
Weigel, C., & Hiebl, M. R. W. (2023). Accountants and small businesses: toward a resource-based view. Journal of Accounting & Organizational Change, 19(5), 642–666. https://doi.org/10.1108/JAOC-03-2022-0044
Zaky, M., & Zainuddin Hamidi, D. (2022). The Role of Financial Technology in Improving Financial Literacy for MSME Actors. KnE Social Sciences, 257–266. https://doi.org/10.18502/kss.v7i14.11974
Downloads
Additional Files
Published
How to Cite
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
