The effects of financial literacy and digital literacy on financial resilience: Serial mediation roles of financial inclusion and financial decisions

Abstract

The research objective was to analyze the effect of financial literacy and digital literacy on financial inclusion, financial decisions, and financial resilience of MSME's. The design of this research is explanatory quantitative research. The research is a cross-sectional study in which all research variables are measured and observed at one point in time. The sampling technique used is area purposive sampling. The reachable population in this study was 98,567 MSMEs in the Province of Bali, and the research sample was 385. The research instrument used was a questionnaire with a Likert scale. The analysis technique used is a descriptive and inferential analysis using SEM-PLS. The findings of this research reveal 1) a direct positive and significant effect of financial literacy and digital literacy on financial inclusion, financial decisions, and financial resilience of MSMEs; 2) a positive and significant effect of financial literacy and digital literacy on financial resilience of MSMEs through financial inclusion and financial decisions parallelly; and 3) a positive effect of financial literacy and digital literacy on financial resilience of MSMEs through financial inclusion and financial decisions serially, but the effect of digital literacy on financial resilience through financial inclusion and financial decisions serially is insignificant. The findings of this research show the crucial role of financial literacy and digital literacy in increasing financial resilience. Financial inclusion and financial decisions mediate the effect of financial literacy and digital literacy on financial resilience.