The Impact of Financial Literacy on Sustainability of Small Businesses: Government Policy Perspective

Kusdi Raharjo, Saparila Worokinasih and Nur Imamah

A chapter in Macroeconomic Risk and Growth in the Southeast Asian Countries: Insight from Indonesia, 2023, vol. 33A, pp 19-33 from Emerald Group Publishing Limited

Abstract: Indonesia is one of the largest developing countries in the world and is a profitable market for investors. Small and medium-sized businesses are one of the business activities that contribute to the improvement of the Indonesian economy. This study examines the influence of government policies on financial literacy and the impact of financial literacy on small and medium enterprises’ (SMEs) sustainability. It employs the resource-based view (RBV) and knowledge-based view (KBV) to develop conceptual models. The model is tested with data collected from 132 SMEs in Malang-East Java, Indonesia, in 2020 through a structured questionnaire. This study uses the G-Power version 3.1 software for initial analysis and the partial least square (PLS) analysis method to test this hypothesis. The results show that government policies positively affect SMEs’ sustainability, and financial literacy positively affects SMEs’ sustainability. This implies that government policy and financial literacy are essential factors for SMEs’ resources and knowledge for business sustainability.

Keywords: Government policy; financial literacy; small and medium enterprises; sustainability; developing economy; Indonesia; E60; G28; G53; M1 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:isetez:s1571-03862023000033a002

DOI: 10.1108/S1571-03862023000033A002

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