Article Sidebar

Download
Download Article

Main Article Content

Abstract

This study aims to analyze the effect of financial literacy and financial digitalization on the profitability of MSMEs registered with the Palu City Business Incubator (INBIS) in the 2023-2024 period. Given the crucial role of MSMEs in the local economy and the challenges related to financial literacy and digitalization adoption, this study seeks to provide empirical evidence. A quantitative approach with descriptive and causal methods was used, involving 30 MSMEs through a census to obtain comprehensive data. Data analysis was carried out using multiple linear regression. The results showed that financial literacy significantly affected MSME profitability, making a greater contribution than financial digitalization. Financial digitalization also had a positive impact, although its contribution was relatively smaller. Simultaneously, financial literacy and financial digitalization significantly affected MSME profitability. These findings emphasize the importance of a combination of good financial literacy and adoption of digital technology. The implication is that the government and INBIS need to design a sustainable integrated training program to improve MSME digital financial literacy. MSMEs are advised to actively utilize digital financial platforms and improve their understanding of financial management. Financial institutions are expected to develop products according to MSME needs and provide more effective financial education. This research provides insights for stakeholders in supporting the growth of MSMEs through increasing literacy and digital transformation, which ultimately contributes to regional economic stability.

Keywords

Financial Literacy Financial Digitalization Profitability MSMEs

Article Details

Creative Commons License

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

How to Cite
Sitriani, A., Zainuddin, F. ., Muslimin, M. ., & Risendy, R. . (2025). The Influence of Financial Literacy and Financial Digitalization on the Profitability: Study on Micro and Small Enterprises Business Incubator in Palu City, Indonesia. Golden Ratio of Finance Management, 5(1), 228–238. https://doi.org/10.52970/grfm.v5i1.997
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Ardiansyah, LY, Darusalam, D., & Febriana, W. (2023). The Influence of Digital Financial Literacy on Business Development: A Case Study of MSMEs in Praya, Central Lombok Regency. Income : Digital Business Journal , 1 (1), 59–66. https://doi.org/10.30812/income.v1i1.2659
  2. Arini, VN, Kurniansi, K., Parwati, NMS, & Fera, F. (2023). Analysis and Marketing Mix of MSME Development Prospects in Karawana Village, Dolo District, Sigi Regency . 1 , 182–193.
  3. Bachri, S., Putra, SM, Farid, ES, Darman, D., & Mayapada, AG (2023). The Digital Marketing To Influence Customer Satisfaction Mediated By Purchase Decision. Jurnal Aplikasi Manajemen , 21 (3). https://doi.org/10.21776/ub.jam.2023.021.03.03
  4. Bhatt, A., Joshipura, M., & Joshipura, N. (2022). Decoding the trinity of Fintech, digitalization and financial services: An integrated bibliometric analysis and thematic literature review approach. Cogent Economics & Finance , 10 (1), 2114160. https://doi.org/10.1080/23322039.2022.2114160
  5. Chen, H., & Volpe, R. P. (1998). An Analysis of Personal Financial Literacy Among College Students. Financial Services Review , 7 (2), 107–128. https://doi.org/10.1016/S1057-0810(99)80006-7
  6. Darman. (2019). Financial Technology (FinTech): Characteristics and Quality of Loans in Peer to Peer Lending in Indonesia. Journal of Technology Management , 18 (2), 130–137. https://doi.org/10.12695/jmt.2019.18.2.4
  7. Demu, Y. (2023). The Influence Of Product Quality, Financial Literacy, Digital Literacy, Financial Management, And Digital Marketing On The Profitability of MSME Businesses. Interdisciplinary Journal and Humanity (Injurity) , 2 (7), 576–591. https://doi.org/10.58631/injurity.v2i7.91
  8. Dewanto, AK (2017). The Effect Of Leverage Ratio And Profitability On The Value Of Food And Beverage Industry Companies Listed On The Indonesia Stock Exchange. On Line , 3 (1).
  9. Djoewita, D., Handayati, P., & Maharani, SN (2024). The Role of Financial Technology and Financial Literacy to Improve Financial Performance of MSMEs in the Malang Region. Accounting 45 , 5 (1), 11–29. https://doi.org/10.30640/akuntansi45.v5i1.2393
  10. Endarto, EAP, & Tirtana, AA (2020a). The Influence of Financial Literacy on the Profitability of Micro, Small and Medium Enterprises in Tangerang City. Ultimaccounting : Journal of Accounting Science , 12 (2), 270–293. https://doi.org/10.31937/akuntansi.v12i2.1877
  11. Endarto, EAP, & Tirtana, AA (2020b). The Influence of Financial Literacy on the Profitability of Micro, Small and Medium Enterprises in Tangerang City. Ultimaccounting : Journal of Accounting Science , 12 (2), 270–293. https://doi.org/10.31937/akuntansi.v12i2.1877
  12. Ferdinandus, SJ, Bugis, MSG, & Pattiruhu, JR (2022). Analysis of the Influence of Financial Technology on the Profitability of State-Owned Banking Companies in Indonesia . 11 , 1039–1045.
  13. Frimpong, S. E., Agyapong, G., & Agyapong, D. (2022). Financial literacy, access to digital finance and performance of SMEs: Evidence From Central region of Ghana. Cogent Economics & Finance , 10 (1), 2121356. https://doi.org/10.1080/23322039.2022.2121356
  14. Harahap, LM, Sari, MM, Simanjuntak, H., Sitompul, PS, & Saragih, A. (2024). The Influence of Budgeting on the Profitability of MSMEs (Case Study of the Ndower Solo Pentol Stall at the MMTC Market, Medan) . 1 .
  15. Hartina, H., Goso, G., & Palatte, MH (2023). Analysis of the Impact of Financial Literacy and Financial Management on MSME Financial Performance . 6 .
  16. Ibrahim, AI, Setiawan, M., Noermijati, & Rahayu, M. (2024). Hr Innovation In Mediating Entrepreneurial Motivation In Improving The Competitive Ability Of Palu Fried Onions Msmes. Business, Management and Economics Engineering , 22 (01), 77–95. https://doi.org/10.3846/bmee.2024.19933
  17. Ismail, M., Sudjiman, LS, & Ferinia, R. (2023). Financial Literacy, Digital Awareness, Managerial Position: An Evidence from Financial Research. Coopetition : Scientific Journal of Management , 14 (1), 29–42. https://doi.org/10.32670/coopetition.v14i1.2906
  18. Kartini, T., & Wijaya, JH (2024). Analysis of Financial Literacy and Capital Access to the Financial Performance of MSMEs in Subang Regency . 5 , 199–207.
  19. Lu, Z., Zhitao, W., Minghuan, L., Yajun, D., & Runkai, N. (2024). How Digital Finance Affects The Financial Asset Allocation Of Brick-And-Mortar Businesses. Economic Research-Ekonomska Istraživanja , 37 (1), 2341219. https://doi.org/10.1080/1331677X.2024.2341219
  20. Muhammad, N., Kasim, MY, & Fattah, V. (2016). The Effect of Dividend Policy, Profitability, and Company Asset Growth on Company Value in the Manufacturing Industry on the Indonesia Stock Exchange. Journal of Management Science, Tadulako University (JIMUT) , 2 (3), 281–292. https://doi.org/10.22487/jimut.v2i3.65
  21. Mukhtar, T., Evvy, RNP, & Darman, D. (2017). The Role Of Financial Literacy In Creative Industry Growth: Women Entrepreneur Study Of Donggala Woven Fabric Industry. Russian Journal of Agricultural and Socio-Economic Sciences , 69 (9), 191–195. https://doi.org/10.18551/rjoas.2017-09.24
  22. Muzakir, M., Bachri, S., Adam, RP, & Wahyuningsih, W. (2021). The analysis of forming dimensions of e-service quality for online travel services. International Journal of Data and Network Science , 239–244. https://doi.org/10.5267/j.ijdns.2021.6.010
  23. Ngong, C. A. (2024). Financial technology and economic growth nexus in the East African community states. Journal of Economics, Finance and Administrative Science , 29 (58), 263–276. https://doi.org/10.1108/JEFAS-01-2022-0009
  24. OJK. (2022). Financial Literacy . Financial Services Authority. https://www.ojk.go.id/id/kanal/edukasi-dan-perlindungan-konsumen/Pages/Literasi-Keuangan.aspx
  25. Pahlawi, N., Alie, MS, , Hasbullah, Hasbullah, Reny, A., Desmon, D., Cn, Y., & Indriyani, S. (2024). The Influence of Financial Literacy, Ease of Digital Payment and Financial Inclusion on the Performance of UMKM in the City of Bandar Lampung. . . COSTING , 7 , 722–733.
  26. Parandy, LM, Ratna Tungga Dewa, DM, Adhi Pramono, S., Restu Suwondo, JP, & Nurdiani, TW (2024). Analysis of The Influence of Digital Financial Literacy Understanding on The Profitability of Small and Medium Micro Enterprises. Journal of Information Systems and Technology , 19–23. https://doi.org/10.60083/jsisfotek.v6i1.341
  27. Perisa, A., Kurnoga, N., & Sopta, M. (2017). Multivariate analysis of profitability indicators for selected companies of Croatian market . : 231-242.
  28. Primandari, NR, Utami, EY, Nurhakim, A., Uli, NZ, & Utomo, B. (2024). Analysis of the Influence of Financial Literacy on the Performance and Sustainability of MSMEs in Indonesia . 08 (02).
  29. Putra, R., & Kadang, J. (2020). The Effect of Operating Leverage and Financial Leverage on Profitability . 6 .
  30. Putri, SSC, & Kadang, J. (2024). The Role of Financial Literacy and Financial Technology in Improving MSME Performance . 7 , 3287-3296.
  31. Rahayu, R. (2022). Analysis of Factors Affecting the Level of Digital Financial Literacy: A Study on Generation Z in Indonesia. Indonesian Accounting and Business Review , 6 (1), 74–87. https://doi.org/10.18196/rabin.v6i1.14268
  32. Rahim, S., & Balan, V.R. (2020). Financial Literacy: The Impact on the Profitability of the SMEs in Kuching. International Journal of Business and Society , 21 (3), 1172–1191. https://doi.org/10.33736/ijbs.3333.2020
  33. Ramadhani, D., Sukoco, A., & Suyono, J. (2019). Capital Structure Analysis To Optimize The Profitability Of Msmes (Case Study On Msmes Hikmah In Sidoarjo, East Java, Indonesia). Journal of World Conferences (JWC) , 1 (2), 241–250. https://doi.org/10.29138/prd.v1i2.161
  34. Rianisari, A., Husnah, H., & Bidin, CRK (2020). The Effect of Liquidity, Leverage, and Profitability on Stock Prices of the Food and Beverage Industry at the IDX. Journal of Management Science, Tadulako University (JIMUT) , 4 (2), 113–120. https://doi.org/10.22487/jimut.v4i2.112
  35. Rombe, E., Zahara, Z., Santi, IN, & Rahadhini, MD (2021). Exploring e-mobile banking implementation barriers on Indonesian millennial generation consumers. International Journal of Data and Network Science , 5 (4), 579–586. https://doi.org/10.5267/j.ijdns.2021.8.010
  36. Rusyida, WY (2022). The Influence of Managerial Ability, Financial Literacy, and Risk Mitigation on the Sustainability of MSME Businesses. Insight : Journal of Management, Economics and Entrepreneurship , 1 (1), 01–19. https://doi.org/10.58192/wawasan.v1i1.181
  37. Sohilauw, MI, Nohong, M., & Sylvana, A. (2020). (The Relationship between Financial Literacy, Rational Financing Decisions and Financial Achievement: A Study .
  38. Susanto, P.C., Arini, D.U., Yuntina, L., Soehaditama, J., & Nuraeni, N. (2024). Quantitative Research Concepts: Population, Sample, and Data Analysis (A Literature Review). Multidisciplinary Journal of Science , 3 (1), 1–12. https://doi.org/10.38035/jim.v3i1.504
  39. Tok, yoke wang, & Heng, dyna. (2022). Fintech: Financial Inclusion or Exclusion .
  40. Totanan, C., Mayapada, AG, Yamin, NY, Parwati, NMS, & Indriasari, R. (2021). The effect of patronage buying motives on small business profitability: Evidence from Indonesia. Innovative Marketing , 17 (1), 109–119. https://doi.org/10.21511/im.17(1).2021.09
  41. Trimustikapuri, T., Fatlina, Z., Fattah, V., & Samudra, S. (2024). Financial Literacy Development Assistance in Improving MSME Performance . 5 .
  42. Widyastuti, U., Respati, DK, Dewi, VI, & Soma, AM (2024). The nexus of digital financial inclusion, digital financial literacy and demographic factors: Lessons from Indonesia. Cogent Business & Management , 11 (1), 2322778. https://doi.org/10.1080/23311975.2024.2322778
  43. Wijayanti, W., Fatlina, F., Fera, F., & Fattah, V. (2024a). Implementation of Digital Finance in Small and Medium Enterprises Assisted by the Palu City Business Incubator . 1 .
  44. Yang, J., & Liu, X. (2023). The role of sustainable development goals, financial knowledge and investment strategies on the organizational profitability: Moderating impact of government support. Economic Research-Ekonomska Istraživanja , 36 (1), 1570–1591. https://doi.org/10.1080/1331677X.2022.2090405
  45. Yang, J., Wu, Y., & Huang, B. (2023). Digital finance and financial literacy: Evidence from Chinese households. Journal of Banking & Finance , 156 , 107005. https://doi.org/10.1016/j.jbankfin.2023.107005
  46. Yolanda, S., Shaddiq, S., Faisal, H., & Kurnianti, I. (2023a). The Role of Digital Financial Management in Financial Management of MSMEs in Banjarmasin. Indonesian Red Crescent Humanitarian Journal , 2 (1), 23–32. https://doi.org/10.56744/irchum.v2i1.31
  47. Yusuf, M., Fitriyani, ZA, Abdilah, A., Ardianto, R., & Suhendar, A. (2022). The Impact Of Using Tokopedia On Profitability And Consumer Servic . 30 , 559–573.
  48. Zaki, K., & Quora, O. (2019). Profitability in Egyptian hotels: Business model and sustainability impact. Research in Hospitality Management, 9 (2), 89–98. https://doi.org/10.1080/22243534.2019.1689698