The Effect of Financial Literacy and Financial Inclusion on MSMEs Performance

(Case Study in MSMEs Assisted by SME & IKM DPW North Sumatra Province)

DOI

10.2991/978-94-6463-008-4_46How to use a DOI?

Keywords

Financial Literacy; Financial Inclusion; MSMEs Performance

Abstract

The performance of Micro, Small, and Medium Enterprises (MSMEs) has a vital role in the economy in Indonesia. Reaching 99.9% of the total businesses in Indonesia, MSMEs contribute significantly to job creation and employment. However, they still face many problems, especially capital problems, which are indicated by the low level of financial literacy and financial inclusion of MSME actors in Indonesia. This study aims to examine the effect and relationship of financial literacy and financial inclusion either partially or simultaneously on the performance of MSMEs in Indonesia. The population in this study was 517 MSMEs that were assisted by SME & IKM DPW of North Sumatra Province spread over 33 Regencies & Cities in North Sumatra. This study type is quantitative research using an associative approach and using PLS (Partial Least Square) analysis tools. The impact show that financial literacy and financial inclusion partially and simultaneously significantly affect the performance of MSMEs. Furthermore, skills and knowledge are the two most significant financial literacy indicators. Meanwhile, connection and quality are financial inclusion indicators with the most significant effect. Thus, it can be concluded that MSMEs performance in Indonesia can continuously be improved by increasing financial literacy and financial inclusion efforts. The government and relevant stakeholders need to continue developing, adjusting, and ensuring that the current and future programs and policies can be implemented well to address various problems most MSMEs face.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Mangihut Parlindungan Aritonang
AU  - Isfenti Sadalia
AU  - Chairul Muluk
PY  - 2022
DA  - 2022/12/05
TI  - The Effect of Financial Literacy and Financial Inclusion on MSMEs Performance
BT  - Proceedings of the 19th International Symposium on Management (INSYMA 2022)
PB  - Atlantis Press
SP  - 356
EP  - 368
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-008-4_46
DO  - 10.2991/978-94-6463-008-4_46
ID  - Aritonang2022
ER  -