The Role of Financial Literacy in Enhancing Access to Finance and MSME Growth in the Special Region of Yogyakarta

Muhammad Rayyan Al-Mughni; Katiya Nahda

doi:10.63922/ijebir.v4i04.1996

Muhammad Rayyan Al-Mughni Department of Management, Department of Management, Faculty of Business and Economics University of Islam Indonesia, Indonesia.
Katiya Nahda Department of Management, Department of Management, Faculty of Business and Economics University of Islam Indonesia, Indonesia.

DOI: https://doi.org/10.63922/ijebir.v4i04.1996

Keywords: financial literacy, access to financing, MSME growth

Abstract

Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in Indonesia’s economy by contributing significantly to GDP and employment. However, many MSMEs still face challenges in accessing external financing due to limited financial literacy. This study aims to empirically examine the role of financial literacy in improving access to financing and fostering business growth among MSMEs in the Special Region of Yogyakarta. Using a quantitative approach and a sample of 114 MSME owners, data were analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM). The results reveal that financial literacy has a significant positive effect on both access to finance and MSME growth, Moreover, access to financing also positively influences business growth. These findings align the Theory of Planned Behavior and the Resource-Based View, highlighting that financial literacy serves as a strategic intangible resource that enhances MSME competitiveness and sustainability. The study recommends strengthening education and improving the financing ecosystem to support MSME development.

References

Adomako, S., Danso, A., & Ofori Damoah, J. (2016). The moderating influence of financial literacy on the relationship between access to finance and firm growth in Ghana. Venture Capital, 18(1), 43–61. https://doi.org/10.1080/13691066.2015.1079952
Ajzen, I. (1985). From Intentions to Actions: A Theory of Planned Behavior IcekAjzen.
Astohar, A., Dyah Praptitorini, M., Ihsan, M., Suyatno, Y., Aulia, J., S1, A., & Totalwin, S. (2023). Peran Inklusi Keuangan Dalam Memediasi Pengaruh Financial Technology Dan Literasi Keuangan Terhadap Kinerja UMKM di Kota Semarang. Jurnal Akuntan Publik, 1(3), 426–443. https://doi.org/10.59581/jap-widyakarya.v1i3.2682
Bangun, C. S., Suhara, T., & Husin, H. (2023). THE APPLICATION OF THEORY OF PLANNED BEHAVIOR AND PERCEIVED VALUE ON ONLINE PURCHASE BEHAVIOR. Technomedia Journal, 8(1SP), 123–134. https://doi.org/10.33050/tmj.v8i1sp.2074
Barney, J. B. (2001). Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view. Journal of Management, 27(6), 643–650. https://doi.org/10.1177/014920630102700602
Annur. (2019, June 28). Survei PwC: 74% UMKM Belum Dapat Akses Pembiayaan. Katadata.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). MULTIVARIATE DATA ANALYSIS EIGHTH EDITION. www.cengage.com/highered
Hasan, M., Le, T., & Hoque, A. (2021). How does financial literacy impact on inclusive finance? Financial Innovation, 7(1). https://doi.org/10.1186/s40854-021-00259-9
Henry, & Mutiah, D. (2024, May 18). 64 Persen UMKM di Indonesia Dikelola Perempuan, Pemodalan dan Literasi Keuangan Jadi Tantangan Utama. Liputan6.
Iqnatia, Y., Nurmatias, & Pangestuti, D. C. (2021). PENGARUH LITERASI KEUANGAN, INOVASI, DAN PERAN PEMERINTAH TERHADAP PENGEMBANGAN USAHA KECIL DAN MENENGAH. JURNAL APRESIASI EKONOMI, 9(26139774), 213–228.
KEMENKEU. (2024, October 28). Tujuh Tahun Mendukung Usaha Mikro Bertumbuh: Evaluasi dan Tantangan. KEMENKEU.
Mellinia, P. S., Setyorini, T. C., & Budiarti, L. (2023). Strategi Pemulihan UMKM Kuliner Pasca Pandemi Covid-19. JURNAL MANEKSI, 12(4), 2023.
Nurbaeti, I., Mulyati, S., Sugiharto, B., Tinggi, S., & Sutaatmadja, I. E. (2019). THE EFFECT OF FINANCIAL LITERACY AND ACCOUNTING LITERACY TO ENTREPRENEURIAL INTENTION USING THEORY OF PLANNED BEHAVIOR MODEL IN STIE SUTAATMADJA ACCOUNTING STUDENTS. Jurnal of Accounting for Sustainable Society (JASS).
OECD. (2024). Recommendation of the Council on Financial Literacy. http://legalinstruments.oecd.org
OTORITAS JASA KEUANGAN. (2023). PENINGKATAN LITERASI DAN INKLUSI KEUANGAN DI SEKTOR JASA KEUANGAN BAGI KONSUMEN DAN MASYARAKAT.
Pardede, R. N. A., & Wafa, Z. (2023). Pengaruh Literasi Keuangan dan Akses Keuangan Terhadap Perkembangan Usaha Mikro Kecil Menengah di Yogyakarta. JPMNT : JURNAL PENGABDIAN MASYARAKAT NIAN TANA, 2(1), 22–27. https://doi.org/10.59603/jpmnt.v2i1.254
Rahmawati, A., Wahyuningsih, S. H., & Garad, A. (2023). The effect of financial literacy, training and locus of control on creative economic business performance. Social Sciences and Humanities Open, 8(1). https://doi.org/10.1016/j.ssaho.2023.100721
Tuffour, J. K., Amoako, A. A., & Amartey, E. O. (2022). Assessing the Effect of Financial Literacy Among Managers on the Performance of Small-Scale Enterprises. Global Business Review, 23(5), 1200–1217. https://doi.org/10.1177/0972150919899753