The Role of Fintech and Financial Literacy on SMEs Sustainability

Abstract

. Small and Medium Enterprises (SMEs) is a worldwide economy whose development is still constrained in various fields. One of the obstacles is in the financial sector. In this digitalization era, financial technology (fintech) can be widely used because of the increasing penetration of internet users. Nevertheless, SMEs actors are expected to be selective in choosing fin-tech. This aims to avoid losses, so that the SMEs sustainability is created. This study determined the effect of financial technology (fintech) used by SMEs actors on business sustainability mediated by financial literacy. This study used purposive sampling method and involved 300 respondents who are SME actors in Semarang, Kudus and Surakarta. The results of this study indicated that financial technology (fintech) is proven to have a positive effect on financial literacy. Likewise, financial literacy is proven to mediate the relationship of fintech on business sustainability. Thus, SME actors must understand knowledge in the field of financial literacy in order to make the best decisions and the business can develop properly. As the result, the business continuity can be maintained.