Literacy and Performance Drive Inclusion and Sustainability of MSMEs in East Java

Maria Widyastuti; Anita Permatasari

doi:10.55524/ijirem.2026.13.2.16

Abstract

This quantitative research examines MSMEs in East Java. The urgency of this research lies in the strategic contribution MSMEs make to GDP and employment. However, they still lack a strong understanding of financial literacy and financial performance, leading to underutilization of the services and products offered by financial institutions. A purposive sampling method was employed to select 290 respondents. Data were collected using a questionnaire and processed using SmartPLS. The results indicate that financial literacy and financial performance significantly influence financial inclusion. Furthermore, both directly and indirectly, financial literacy and financial performance significantly influence business sustainability. The results indicate that for business sustainability to occur, financial performance must be improved through enhancing financial literacy and financial performance among MSMEs, through mentoring on the importance of financial planning and understanding the ability to access financial services. Of the three variables analyzed, financial literacy is the largest contributor to business sustainability.

Keywords

Financial Literacy; Financial Performance; Financial Inclusion; Business Sustainability

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Cites this article as

M. Widyastuti, A. Permatasari, "Literacy and Performance Drive Inclusion and Sustainability of MSMEs in East Java", International Journal of Innovative Research in Engineering and Management (IJIREM), Vol-13, Issue-2, Page No-114-124, 2026. Available from: https://doi.org/10.55524/ijirem.2026.13.2.16