Financial Literacy’s Moderating Role in Savings and MSME Sustainability:  Evidence from Central Java, Indonesia

Efriyani sumastuti; C. Tri Widiastuti; Rizka Ariyanti; Ali Imron

doi:10.35877/454RI.qems4107

Efriyani sumastuti Universitas PGRI Semarang (ID)
C. Tri Widiastuti Universitas Persatuan Guru Republik Indonesia Semarang (ID)
Rizka Ariyanti ITSNU Pekalongan (ID)
Ali Imron ITSNU Pekalongan (ID)

https://doi.org/10.35877/454RI.qems4107

Keywords: Financial inclusion, Financial literacy, Business saving, Business sustainability, MSMEs

Viewed = 0 time(s)

Abstract

The objective of This investigation is to investigate the influence of financial inclusion and financial literacy on the sustainability of businesses, with business savings serving as a mediating factor and financial literacy acting as a moderator. The study involved 150 culinary MSMEs in Central Java and utilized a quantitative method with the SmartPLS 3.0 analytical tool. The findings suggest that financial literacy and financial inclusion significant direct influences on business sustainability. Additionally, Financial literacy significantly influences business savings, highlighting its important role in shaping the financial behaviors of MSMEs. On the other hand, business savings do not show a statistically significant direct impact on business sustainability, and their mediating role receives only partial support. The moderating effect of financial literacy on the connection between business savings and business sustainability is significant but in a negative direction. These results suggest that while financial literacy is generally advantageous, it can change the role of savings if not integrated with effective financial planning. This research provides a theoretical contribution to the comprehension of financial behavior models in MSMEs and supports the achievement of SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure) through inclusive financial empowerment.

References

Ahmad, M., Yaser, A., & Hamshari, M. (2024). Discover Sustainability The impact of financial literacy on financial inclusion for financial well ‑ being of youth : evidence from Jordan. Discover Sustainability. https://doi.org/10.1007/s43621-024-00704-6
Ahmed, H. (2025). Crowdfunding and entrepreneurial/SME finance: regulatory framework for financial inclusion. Journal of Banking Regulation, 0123456789. https://doi.org/10.1057/s41261-025-00273-2
Alshammari, A. M. (2025). How does financial inclusion influence environmental sustainability in Saudi Arabia? Energy Strategy Reviews, 57(December 2024), 101643. https://doi.org/10.1016/j.esr.2025.101643
Azmeh, C. (2025). Bridging divides: the role of Fintech and financial inclusion in reducing poverty and inequality in developing countries. Innovation and Development, 10(February), 100277. https://doi.org/10.1080/2157930X.2025.2467515
Baporikar, N., & Akino, S. (2020). Financial Literacy Imperative for Success of Women Entrepreneurship. International Journal of Innovation in the Digital Economy, 11(3), 1–21. https://doi.org/10.4018/ijide.2020070101
Brixiová, Z., Kangoye, T., & Yogo, T. U. (2020). Access to finance among small and medium-sized enterprises and job creation in Africa. Structural Change and Economic Dynamics, 55, 177–189. https://doi.org/10.1016/j.strueco.2020.08.008
Charfeddine, L., Umlai, M. I., & El-Masri, M. (2024). Impact of financial literacy, perceived access to finance, ICT use, and digitization on credit constraints: evidence from Qatari MSME importers. Financial Innovation, 10(1). https://doi.org/10.1186/s40854-023-00557-4
Dong, Q., Balsalobre-Lorente, D., & Syed, Q. R. (2025). The critical role of financial inclusion in green growth: Evidence from BRICS countries. Research in International Business and Finance, 76, 102847. https://doi.org/10.1016/j.ribaf.2025.102847
Efriyani Sumastuti, Subur Harahap, G. S. (2024). Exploring the Impact of Green Finance, Financial Literacy, and Social Capital on the Performance and Financial Sustainability of Indonesian MSMES. COSTING:Journal of Economic, Business and Accounting Volume, 7(4), 10869–10886. https://doi.org/https://doi.org/10.31539/costing.v7i4.9719
Joseph F. Hair, J., Ringle, G. T. M. H. C. M., & Sarstedt, M. (2022). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) (L. Fargotstein (ed.); Third Edit). SAGE Publishing.
Maulana, S., Nasution, S. Y., Pramadi, Y., Rusata, T., Hartanto, A., & Hendrix, T. (2024). Conceptual Model on Creative Economy Development of Waterfront Cities in Indonesia: Lesson Learned From Palembang and Surabaya. Spatium, 123(51), 21–31. https://doi.org/10.2298/SPAT231219004M
Morgan, P. J., & Long, T. Q. (2020). Financial literacy, financial inclusion, and savings behavior in Laos. Journal of Asian Economics, 68, 101197. https://doi.org/https://doi.org/10.1016/j.asieco.2020.101197
Mpaata, E., Koskei, N., & Saina, E. (2020). Financial literacy and saving behavior among micro and small enterprise owners in Kampala, Uganda : The moderating role of social influence. Journal of Economics, Finance and Accounting Studies (JEFAS), 2(1), 22–34. https://www.al-kindipublisher.com/index.php/jefas/article/view/10
Pandey, A., Kiran, R., & Sharma, R. K. (2025). Examining financial inclusion success in north India via financial inclusion drivers, financial literacy and financial initiatives: A variance based-SEM approach. Journal of Open Innovation: Technology, Market, and Complexity, 11(2), 100542. https://doi.org/10.1016/j.joitmc.2025.100542
Raharjo, I., Ekawati, M., & Syafitri, W. (2022). Forced migration and household welfare in Indonesia. Journal of Innovation in Business and Economics, 6(01), 27–36. https://doi.org/10.22219/jibe.v6i01.20787
Sarstedt, M., & Moisescu, O. I. (2024). Quantifying uncertainty in PLS-SEM-based mediation analyses. Journal of Marketing Analytics, 12(1), 87–96. https://doi.org/10.1057/s41270-023-00231-9
Sarstedt, M., Ringle, C. M., Cheah, J. H., Ting, H., Moisescu, O. I., & Radomir, L. (2020). Structural model robustness checks in PLS-SEM. Tourism Economics, 26(4), 531–554. https://doi.org/10.1177/1354816618823921
Shashwat, S., Chhabra, M., & Giri, A. K. (2025). Environmental Externalities of Digital Financial Inclusion: a Green Growth perspective. Discover Sustainability, 6(1). https://doi.org/10.1007/s43621-025-00862-1
Song, X., Qin, X., Wang, W., & Man Li, R. Y. (2025). Financial inclusion, technologies, and worldwide economic development: A spatial Durbin model approach. Journal of Finance and Data Science, 11(March 2024), 100155. https://doi.org/10.1016/j.jfds.2025.100155
Sumastuti, E., Amelia, D. R., & Indriasari, I. (2024). Are Business Savings a Mediator for Culinary Tourism Development ? Economics Development Analysis Journal, 13(2), 247–258. https://doi.org/https://doi.org/10.15294/edaj.v13i2.78980
Tay, L. Y., Tai, H. T., & Tan, G. S. (2022). Digital financial inclusion: A gateway to sustainable development. Heliyon, 8(6), e09766. https://doi.org/10.1016/j.heliyon.2022.e09766