Digital Financial Inclusion as a Mediator of Digital Financial Literacy and Government Support in MSME Performance

Charles Tandilino, Grace T. Pontoh (), Darmawati Darmawati and Aini Indrijawati
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Charles Tandilino: Directorate of General of Taxes, Ministry of Finance, Jakarta 10110, Indonesia
Grace T. Pontoh: Faculty of Economics and Business, Hasanuddin University, Makassar 90245, Indonesia
Darmawati Darmawati: Faculty of Economics and Business, Hasanuddin University, Makassar 90245, Indonesia
Aini Indrijawati: Faculty of Economics and Business, Hasanuddin University, Makassar 90245, Indonesia

IJFS, 2025, vol. 13, issue 4, 1-21

Abstract: The digital economy creates new opportunities for micro, small, and medium enterprises (MSMEs) in Indonesia to enhance their competitiveness through the adoption of financial technology. This study examines how digital financial inclusion (DFI) mediates the effects of digital financial literacy (DFL) and government support (GS) on MSME performance. This mediating relationship remains underexplored in developing countries, offering new insights into how it drives business advancement. A quantitative approach was applied using partial least squares structural equation modeling (PLS-SEM) based on survey data from 260 culinary MSME owners. The results indicate that knowledge-based resources and institutional support positively influence performance through DFI. DFI drives improvement by expanding market reach, increasing operational efficiency, facilitating transactions, optimizing the value of financial activities, and broadening access to financing. These findings underline the importance of policies that promote inclusive digital ecosystems and strengthen digital capability. Future research approaches should emphasize the integration of behavioral factors, institutional support, and business performance within the evolving MSME ecosystem and can be further developed through longitudinal or cross-sectoral studies to understand the sustainable dynamics of digital transformation.

Keywords: performance; digital financial inclusion; digital financial literacy; government support; micro, small, and medium enterprises (MSMEs) (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
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