The Influence of Financial Literacy on MSME Performance is Mediated by Financial Behavior and Financial Inclusion (Study in Kewapante District-Sikka Regency)

Abstract

This research is motivated by the performance problems of MSMEs in Kewapante District-Sikka Regency from a financial perspective, customer perspective, internal business process perspective and learning and growth perspective. This research aims to determine and analyze the influence of financial literacy, financial behavior and financial inclusion on the performance of MSMEs in Kewapante District, Sikka Regency. Apart from that, this research also aims to determine and analyze the role of financial behavior variables and financial inclusion in mediating the influence of financial literacy on the performance of MSMEs in Kewapante District, Sikka Regency. This type of research is quantitative associative using a path analysis model. The population in this study was 257 MSME actors in Kewapante District, Sikka Regency. Based on the Yamane formula, the number of samples was 156 people and the determination of sample members was based on the Proportionate Random Sampling Technique. Data was collected through questionnaires and analyzed using descriptive methods and hypothesis testing was carried out using PLS (Partial Least Square). The results of the descriptive analysis show that the variables of financial literacy, financial behavior, financial inclusion and MSME performance have been well practiced by MSME actors in Kewapante District, Sikka Regency. The results of hypothesis testing show that: 1) financial literacy has a positive and insignificant effect on the performance of MSMEs, 2) financial literacy has a positive and significant effect on financial behavior, 3) financial literacy has a positive and significant effect on financial inclusion, 4) financial behavior has a positive and significant effect on significantly to the performance of MSMEs, 5) financial inclusion has a positive and significant effect on the performance of MSMEs, 6) financial behavior is able to mediate the influence of financial literacy on the performance of MSMEs, and 7) financial inclusion is able to mediate the influence of financial literacy on the performance of MSMEs.