THE ROLE OF FINANCIAL LITERACY IN FINANCIAL DECISION MAKING OF MSMES IN INDONESIA Della Hilia Anriva (ab*), Anak Agung Gde Satia Utama (c)
ac) Doctoral Program in Accounting Science, Faculty of Economics and Business, Universitas Airlangga, Surabaya 60115, Indonesia
*della.hilia.anriva-2023[at]feb.unair.ac.id
b) Department of Accounting Studies, Faculty of Economics and Business, Universitas Muhammadiyah Riau, Indonesia
Abstract
The study examined the role of financial literacy in the quality of financial decision-making, a phenomenon faced by MSMEs in Indonesia. Additionally, another objective of this study is to identify factors that hinder the improvement of financial literacy among MSMEs. This is a qualitative study, and the research data-which included documentation, observations, and literature studies-was analyzed using NVivo 12 Plus through the stages of transcription, coding, and thematic analysis. The results of this study show that the financial literacy index of MSMEs is 78.32%. There is a significant gap between conventional and Sharia financial literacy, and there are several obstacles in achieving optimal financial literacy. Some major barriers include lower levels of education, limited availability of training programs in rural areas, low awareness of financial management, and a generally weak financial culture. These factors highlight the need for a context-based and sustainable mentoring approach to financial literacy. Such an approach is essential to stimulate knowledge transformation and help MSMEs practice sound financial behavior. More applicable and relevant financial education efforts need to be implemented for MSME actors. Therefore, the government and other stakeholders should broaden access to context-relevant training, practical exposure, and educational campaigns to promote better financial management practices among MSMEs.
