THE ROLE OF FINANCIAL LITERATION IN MODERATING THE RELATIONSHIP BETWEEN ACCESS TO FINANCIAL AND THE GROWTH OF MSMES IN WEST KALIMANTAN PROVINCE – INDONESIA

Girang Permata Gusti,Muhammad Rheza Tawakkal,Yudis Agustira

doi:10.26480/mecj.01.2021.01.06

Abstract

The low rate of financial literacy in West Kalimantan has triggered a study to explore the role of this variable, can it moderate the relationship between financial access and the growth of MSMEs in West Kalimantan Province?. This research uses a descriptive method with an associative research design and 390 MSMEs respondents. The distribution of the questionnaires used postal services, electronic mail, and social media. The results of this study are financial literacy can moderate the relationship between financial access and the growth of MSMEs and financial literacy has a positive and significant effect on the growth of MSMEs. An interesting finding from this research is access to finance has a negative and significant effect on the growth of MSMEs, this result is due to the lack of knowledge of MSMEs about how to manage money obtained from bank loans.

Highlights

Serious efforts to advance Micro, Small and Medium Enterprises (MSMEs) in Indonesia are one of the priorities in the national economy
The main priority of the government of the Republic of Indonesia at this time is how to increase the knowledge of MSME owners and employees to realize the importance of understanding financial inclusion to advance their business in this Industry 4.0 era, which in turn is expected to implement the use of digital finance (100%) throughout the MSME sector in Indonesia
The analysis shows an increase in financial literacy, reduces monitoring costs and serves to optimize the company's capital structure which has a positive impact on the growth of SMEs

Summary

Introduction

Serious efforts to advance Micro, Small and Medium Enterprises (MSMEs) in Indonesia are one of the priorities in the national economy. This is because MSMEs have become the backbone of a populist economic system that aims to reduce poverty and to absorb labor (Mundia and Moronge, 2017; Riwayati, 2017). The main priority of the government of the Republic of Indonesia at this time is how to increase the knowledge of MSME owners and employees to realize the importance of understanding financial inclusion to advance their business in this Industry 4.0 era, which in turn is expected to implement the use of digital finance (100%) throughout the MSME sector in Indonesia. By increasing knowledge of financial inclusion, the opportunity for MSMEs to obtain banking access services will be greater, which in turn can actively contribute to the development and protect themselves from socio-economic shocks (Ibor et al, 2017)

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