The Influence of Islamic Financial Literacy, Innovation and the Government on the Sustainability of MSMEs in Sukabumi City

Abstract

During the COVID-19 pandemic, small and medium enterprises were popular. The significant contribution of micro, small, and medium enterprises (MSMEs) to the community and the government does not match initial expectations. They can provide employment, income, and are a community socio-economic facility that significantly helps the national economy. The problem is that MSME actors are illiterate in Islamic financial literacy. Therefore, they have not been maximized in terms of financial literacy. Moreover, innovation and the role of the government have not been optimally utilized by MSMEs even though the government has issued regulations to help their sustainability. MSME actors in the city of Sukabumi who applied for Government Micro Business Assistance, as many as 80,000 people were the population of this research. Along with the problems above, this research was conducted to determine whether financial literacy, innovation, and the government affect the sustainability of small and medium enterprises in Sukabumi City. The research results indicate the influence of Islamic financial literacy, innovation, and the role of the government on the sustainability of small and medium enterprises in Sukabumi City. This signals that business actors should develop Islamic financial literacy, innovate and optimize the government’s role to ensure the sustainability of SMEs in Sukabumi City.
 Keywords: Islamic financial literacy; Innovation; Government Role; SME sustainability