Article Sidebar

Download
Download Article

Main Article Content

Abstract

This study aims to examine the role of accounting literacy in improving the financial performance of micro, small, and medium enterprises (MSMEs), with a particular focus on micro-entrepreneur communities in Indonesia. Adopting a qualitative literature-based approach, the research synthesizes findings from forty-two peer-reviewed studies published between 2014 and 2025. The study explores how accounting knowledge, skills, and behavior collectively influence financial decision-making, liquidity management, profitability, and access to credit among micro-scale enterprises. Methodologically, a thematic synthesis was conducted based on a systematic literature search, quality appraisal using CASP and JBI frameworks, and coding through NVivo. Key findings reveal that accounting literacy is positively associated with critical financial indicators such as net profit margin, current ratio, and loan approval rates. Moreover, accounting literacy enhances the utility of digital bookkeeping applications and acts as a mediator in the effective adoption of financial technologies. In addition, the research identifies accounting literacy as a foundational capability for sustainability-related practices, including cost tracking for environmental impact, waste reduction, and access to green finance. These insights validate the conceptual framing drawn from human capital theory, the resource-based view, and absorptive capacity literature, positioning accounting literacy as a technical competency and a strategic resource for long-term enterprise resilience. The study concludes that accounting literacy is essential for inclusive economic development and recommends integrating literacy training with digital tools and sustainability incentives to enhance the competitiveness and sustainability of Indonesian micro-enterprises.

Keywords

Accounting Literacy Financial Performance Micro-Enterprises Sustainability Indonesia

Article Details

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

How to Cite
Nurani, N., Intan Permatasari, R. L., Khalik, A., Hamzah, M., & Nurhani, N. (2025). The Role of Accounting Literacy in Improving the Financial Performance of SMEs: A Study on Micro Entrepreneur Community in Indonesia. Golden Ratio of Community Services and Dedication, 5(2), 28–39. https://doi.org/10.52970/grcsd.v5i2.1451
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Abdallah, W., Harraf, A., Ghura, H., & Abrar, M. (2024). Financial literacy and small and medium enterprises' performance: The moderating role of financial access. Journal of Financial Reporting and Accounting.
  2. Adekanmbi, M. A., & Oladejo, M. O. (2021). Accounting knowledge and financial discipline among SMEs in Nigeria. African Journal of Business Management, 15(3), 112–124.
  3. Adomako, S., & Danso, A. (2024). Accounting literacy and SME financing in developing economies. Journal of Developmental Finance, 11(1), 45–59.
  4. Al-shami, S. A., Damayanti, R., Adil, H., & Al Mamun, A. (2024). Financial and digital financial literacy through social media use towards financial inclusion among Batik small enterprises in Indonesia. Journal of Indonesian Economic Studies, 9(2), 78–92.
  5. Baroroh, N. K., Mahfud, M. K., & Mulyani, S. R. (2020). Accounting literacy and MSME performance in Central Java. Jurnal Ilmu Ekonomi dan Bisnis Islam, 11(2), 145–157.
  6. Becker, G. S. (1964). Human capital: A theoretical and empirical analysis. University of Chicago Press.
  7. Damayanti, D., Sulistyowati, H., & Sari, I. (2018). Financial training and business performance: Evidence from Indonesian MSMEs. Journal of MSME Development, 5(1), 22–37.
  8. Fatoki, O. (2014). The financial literacy of micro-entrepreneurs in South Africa. Journal of Social Sciences, 40(2), 151–158.
  9. Harnida, M., Vasudevan, A., Mardah, S., & Shelash Mohammad, S. I. (2024). MSME sustainability: The role of digitalization and financial literacy. Journal of Regional Development and Sustainability, 12(4), 123–140.
  10. Hidayat-ur-Rehman, M. (2024). Financial literacy, risk management, and SME resilience: Evidence from Kuwait. Arabian Journal of Finance & Management, 7(2), 53–68.
  11. Khanna, V., & Ajayi, K. (2024). Accounting literacy and access to credit among Ghanaian micro firms. Small Enterprise Research, 31(1), 92–108.
  12. Kiswanto, K., Dewi, A. R., & Setiawan, A. (2020). Influence of accounting literacy on SME financial performance. Jurnal Riset Akuntansi dan Keuangan, 8(1), 12–22.
  13. Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5–44.
  14. Mahya, Y. (2024). Financial literacy and behaviour as predictors of SME financial performance in Indonesia. Eduvest: Journal of Universal Studies, 4(10), 9424–9433.
  15. Misra, A., & Setyawan, D. (2023). Government workshops and SME gross profit improvements in Indonesia. Journal of Public Economics & Policy, 15(2), 201–218.
  16. Molosiwa, T., & Holland, J. (2025). The impact of financial literacy on SME performance: A systematic review. International Journal of Research in Business and Social Science, 14(3), 320–332.
  17. Musthafa, I., Hermawan, A., & Sudarsono, N. (2023). Financial literacy and MSME performance: A systematic literature review. Journal of Management, Accounting, and Finance, 3(1), 289–299.
  18. Page, M. J., McKenzie, J. E., Bossuyt, P. M., Boutron, I., Hoffmann, T. C., Mulrow, C. D., … Moher, D. (2021). The PRISMA 2020 statement: An updated guideline for reporting systematic reviews. BMJ, 372, n71.
  19. Permana, I., Sugiharto, B. H., Suardi, S., & Pasuruan, Y. (2024). Business sustainability and digital literacy in MSMEs. Tanjung Lesung Economic Journal, 2(1), 45–60.
  20. Remund, D. L. (2010). Financial literacy explicated: The case for a more precise definition in an increasingly complex economy. Journal of Consumer Affairs, 44(2), 276–295.
  21. Siregar, E. Y., & Widodo, D. (2025). Digital literacy moderates the relationship between accounting knowledge and performance in SMEs. Jurnal Ekonomi Digital Indonesia, 3(1), 67–79.
  22. Sudarmiatin, Y., Mahfudz, M. F., & Yuliana, L. (2021). The mediating role of financial behavior in MSME financial performance. Malang Journal of Economics, 7(1), 58–75.
  23. Utami, R., & Siahaan, R. (2023). Accounting information use as a mediator in SME profitability: Evidence from Indonesia. Journal of Accounting Research in Emerging Economies, 9(3), 225–240.
  24. Wang, C. C., & Chiu, Y. H. (2022). Effects of accounting literacy on crisis resilience among Taiwanese SMEs. Asia-Pacific Journal of Accounting & Economics, 29(4), 507–526.

Similar Articles

1 2 3 4 5 6 > >> 

You may also start an advanced similarity search for this article.