Financial Literacy and Financial Access as Determinants of Micro, Small, and Medium Enterprise Performance: Evidence from the Border Region of Talaud Islands Regency, Indonesia

Rizal Ontorael, Thessalonica S.F. Supit, Zuci Rahmani Zainal

Abstract


Micro, Small, and Medium Enterprises (MSMEs) constitute a significant
driver of economic growth, employment generation, and regional
development, particularly in border areas where financial resources and
institutional support are often constrained. This study aims to examine the
effects of financial literacy and financial access on the performance of
MSMEs in the border region of Talaud Islands Regency, Indonesia. A
quantitative research approach was adopted, with primary data collected
through a structured questionnaire administered to 150 MSME owners.
The proposed research model was analyzed using Warp Partial Least
Squares (WarpPLS), which enables the simultaneous assessment of
measurement validity and structural relationships among the study
variables. The empirical findings demonstrate that financial literacy and
financial access exert positive and statistically significant effects on
MSME performance. Financial literacy enhances entrepreneurs' ability to
manage financial resources effectively, evaluate business risks, and make
informed strategic decisions, thereby improving overall business
performance. Furthermore, greater financial access enables MSMEs to
obtain external financing, expand business operations, increase
productivity, and strengthen long-term business sustainability. These
findings suggest that improving financial capabilities and expanding
access to formal financial services are essential for enhancing the
competitiveness and resilience of MSMEs in geographically
disadvantaged border regions


Keywords


Financial Literacy, Financial Access, MSMEs Performance

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DOI: https://doi.org/10.17509/asset.v6i2.106038

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