An Empirical Analysis of Digitalization and Financial Inclusion on MSME Performance
Keywords:
Cashless Payment, Financial Inclusion, Financial Technology, Market AggregatorAbstract
This study aims to investigate how the performance of MSMEs is influenced by financial technology and financial inclusion. Financial technology is represented by cashless payment and market aggregators. This study collected data via a purposive sampling survey with 109 MSME entrepreneurs in Ambon City. The study examines the performance of MSMEs as the dependent variable, with cashless payment, market aggregators, and financial inclusion as independent variables. The structural equation model partial least squares (SEM-PLS) was used for analysis. The study demonstrates that the elements of financial technology - cashless payment and market aggregators- significantly contribute to MSMEs' performance. Furthermore, the study provides evidence that financial inclusion does not significantly affect the performance of MSMEs. These results imply that the more optimally MSME entrepreneurs utilize cashless payment and market aggregators, the better their business performance will be. MSMEs should adopt cashless payment systems to facilitate transactions and increase sales. In addition, they should also be accustomed to accessing digital funding information to support business performance.
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