Improving Business Performance through Financial Literacy and Financial Technology

Deny Riyanda Defid

Abstract


Beyond the number of business units, micro-enterprises also play a significant role in employment. Data shows that the MSME sector will employ 45,305,983 people by 2025, with approximately 97.85% of these employed by micro-enterprises. This confirms the crucial role micro-enterprises play in reducing unemployment and improving social welfare. Although the number of micro-enterprises continues to increase and absorb a significant workforce, structural problems remain evident in the slow transformation of micro-enterprises into small and medium-sized enterprises. Data shows that micro-enterprise growth from 2024 to 2025 reached 30,440 units, or 0.10%, while small businesses only increased by 12 units, or 0.02%, and medium-sized businesses experienced no significant growth. This condition indicates that most micro-enterprises are experiencing stagnation and are struggling to scale up to a higher level. This phenomenon is a serious concern because if micro-enterprises remain stagnant without capacity expansion, their contribution to productivity and economic competitiveness will be limited. Therefore, efforts are needed to encourage improved business performance so that micro-enterprises can grow and transform into larger enterprises. One of the factors suspected of influencing the low ability of micro-businesses to develop is the level of financial literacy of business actors. Financial literacy is a set of skills that enable individuals to make informed and effective decisions to improve their well-being and minimize the loss of time and money. Research shows that financial literacy enables individuals to better prepare for the future, while those with poor financial literacy and skills may struggle. Entrepreneurs with good financial literacy tend to be able to develop financial plans, manage cash flow, and make appropriate investment decisions to improve their business performance.


Full Text:

PDF

References


Journals:

Alamsyah, M. (2020). Pengaruh literasi keuangan dan kualitas manajemen keuangan terhadap kinerja keuangan pada ukm meubel di kota gorontalo. Journal.Feb.Unmul.Ac.IdMF AlamsyahFORUM EKONOMI: Jurnal Ekonomi, Manajemen Dan Akuntansi, 2020•journal.Feb.Unmul.Ac.Id, 22(2), 245–255. https://journal.feb.unmul.ac.id/index.php/FORUMEKONOMI/article/view/7 503

Alshebami, A. S., & Aldhyani, T. H. H. (2022). The Interplay of Social Influence, Financial Literacy, and Saving Behaviour among Saudi Youth and the Moderating Effect of Self-Control. Sustainability 2022, Vol. 14, Page 8780, 14(14), 8780. https://doi.org/10.3390/SU14148780

Anthony, M., Sabri, M. F., Magli, A. S., Rahim, H. A., Burhan@Jaohari, N. A. S., Othman, M. A., & Abdullah, H. (2021). The Financial Health and The Usage of Financial Technology among Young Adults. International Journal of Academic Research in Business and Social Sciences, 11(19), 44–67. https://doi.org/10.6007/IJARBSS/V11-I19/11716

Bartholomae, S., & Fox, J. J. (2021). Overview of financial education. The Routledge Handbook of Financial Literacy, 173–186. https://doi.org/10.4324/9781003025221-17

Cassetta, E., Monarca, U., Dileo, I., Di Berardino, C., & Pini, M. (2020). The relationship between digital technologies and internationalisation. Evidence from Italian SMEs. Industry and Innovation, 27(4), 311–339. https://doi.org/10.1080/13662716.2019.1696182

Cohen, J. (1988). Statistical Power Analysis for the Behavioral Sciences. Statistical Power Analysis for the Behavioral Sciences, 1–567. https://doi.org/10.4324/9780203771587/STATISTICAL-POWER-ANALYSIS-BEHAVIORAL-SCIENCES-JACOB-COHEN/RIGHTS-AND-PERMISSIONS

Dapp, T. F. (2014). Fintech–The digital (r) evolution in the financial sector. Finextra.ComT Dapp, L Slomka, DB AG, R HoffmannDeutsche Bank Research, 2014•finextra.Com. https://www.finextra.com/finextra-downloads/featuredocs/prod0000000000345837.pdf

Frizzo-Barker, J., Chow-White, P. A., Adams, P. R., Mentanko, J., Ha, D., & Green, S. (2020). Blockchain as a disruptive technology for business: A systematic review. International Journal of Information Management, 51, 102029. https://doi.org/10.1016/J.IJINFOMGT.2019.10.014

Gabor, D., & Brooks, S. (2017). The digital revolution in financial inclusion: international development in the fintech era. New Political Economy, 22(4), 423–436. https://doi.org/10.1080/13563467.2017.1259298

Giudici, P. (2018). Fintech Risk Management: A Research Challenge for Artificial Intelligence in Finance. Frontiers in Artificial Intelligence, 1, 1. https://doi.org/10.3389/frai.2018.00001

Kefela, G. (2011). Implications of financial literacy in developing countries. African Journal of Business Management, 5(9), 3699–3705. https://doi.org/10.5897/AJBM09.297

Kumari, S., & Harikrishnan, A. (2021). Importance of Financial literacy For Sustainable Future Environment: A Research Among People In Rural Areas With Special Reference To Mandi District, Himachal Pradesh. International Journal of Engineering, Science and Information Technology, 1(1), 15–19. https://doi.org/10.52088/ijesty.v1i2.36

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

Lontchi, C. B., Yang, B., & Shuaib, K. M. (2023). Effect of Financial Technology on SMEs Performance in Cameroon amid COVID-19 Recovery: The Mediating Effect of Financial Literacy. Sustainability (Switzerland), 15(3). https://doi.org/10.3390/SU15032171

Marrara, S., Pejic-Bach, M., Seljan, S., & Topalovic, A. (2021). FinTech and SMEs: The Italian case. In Research Anthology on Small Business Strategies for Success and Survival (pp. 667–688). IGI Global Scientific Publishing. https://doi.org/10.4018/978-1-7998-9155-0.ch034

Menike, L. M. C. S. (2018). Effect of Financial Literacy on Firm Performance of Small and Medium Enterprises in Sri Lanka. SSRN Electronic Journal. https://doi.org/10.2139/SSRN.3306719

Nguyen, P. V., Huynh, H. T. N., Lam, L. N. H., Le, T. B., & Nguyen, N. H. X. (2021). The impact of entrepreneurial leadership on SMEs’ performance: the mediating effects of organizational factors. Heliyon, 7(6), e07326. https://doi.org/10.1016/j.heliyon.2021.e07326

Okello, G. C. B., Ntayi, J. M., Munene, J. C., & Malinga, C. A. (2017). The relationship between access to finance and growth of SMEs in developing economies: financial literacy as a moderator. Review of International Business and Strategy, 26(1).

Onah, O. G., Enete, A. A., Okoye, C. U., Ume, C. O., & Onyia, C. C. (2024). Impact of credit access of farmers in cooperative societies on financial performance: the predictive effect of financial literacy. International Journal of Social Economics, 51(11), 1420–1433. https://doi.org/10.1108/IJSE-10-2023-0837

Prasetyo, E., & Farida, F. (2022). Pengaruh E-Commerce, Pengetahuan Akuntansi, Budaya Organisasi dan Literasi Keuangan terhadap Kinerja UMKM. National Multidisciplinary Sciences, 1(3), 370–383. https://doi.org/10.32528/NMS.V1I3.102


Refbacks

  • There are currently no refbacks.


License URL: https://creativecommons.org/licenses/by/4.0/deed.en

Jurnal SAMaJ Indexed by :

google_scholar onesearch garuda crosref onesearch  sinta scopus