MITIGATING FINANCIAL LITERACY AND MSMEs PERFORMANCE: A COMPARISON WITH ISLAMIC FINANCIAL LITERACY IN INDONESIAN

Abstract

This research is related to comparing financial literacy towards MSMEs with Islamic financial literacy towards MSMEs. Furthermore, it describes the composition of MSMEs in Indonesia based on financial potential and employment. The sample used was 211 from Pekanbaru city. Where the majority of MSME actors are women, less than 25 years old, university graduates, employment below 5 people and sales turnover ranging from 5 million rupiah to 10 million rupiah every month. The analysis method uses PLS-SEM with the tool Smart PLS 3. Where financial literacy on MSMEs performance is represented by financial behavior, financial knowledge and financial attitude variables. Where each variable has a significant effect and positive correlation. Meanwhile, Islamic financial literacy on the performance of MSMEs is represented by variables of financial behavior, financial attitude, financial skills and financial awareness which have a significant effect with a positive correlation except financial awareness which is negatively correlated. Meanwhile, the financial knowledge variable in Islamic financial literacy is positively correlated but has no significant effect on the performance of MSMEs in Indonesia.