The Influence of Financial Literacy and Financial Technology in Making Funding Decisions for MSMEs in Pekanbaru City, Riau Province
Keywords:
Funding Decisions, Financial Literacy, Financial TechnologyAbstract
Study’s aim: This study aims to examine the influence of financial literacy and financial technology on funding decisions among Micro, Small, and Medium Enterprises (MSMEs) in Pekanbaru City, Riau Province. Specifically, it investigates whether higher levels of financial literacy and greater utilization of financial technology contribute to more effective and sustainable funding decisions in the culinary MSME sector. Design/Methodology/Approach: This research applies a quantitative survey approach involving 77 culinary MSMEs selected through purposive sampling using G*Power. Data were analyzed using PLS-SEM with SmartPLS 4.0. Findings: Financial literacy (t = 3.681; p = 0.000) and financial technology (t = 4.673; p = 0.000) have positive and significant effects on MSME funding decisions. The model explains 83.2% of the variance in funding decisions. Theoretical Contribution/Originality: This study integrates financial literacy and financial technology to explain MSME funding decisions, highlighting the combined role of financial capability and digital adoption in strengthening financial decision-making. Practitioner/Policy Implication: The results suggest the need to enhance financial literacy programs and promote digital financial services to support sustainable MSME funding strategies. Limitation/Implication: The study is limited to culinary MSMEs in one city and uses cross-sectional data. Future research should expand sectors, regions, and include additional explanatory variables.
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