Understanding the Role of Financial Capability and E-Payment in Enhancing MSME Financial Performance in Surabaya, Indonesia

Abstrak

This study aims to examine the influence of financial knowledge, financial literacy, financial attitude, and e-payment usage on the financial performance of Micro, Small, and Medium Enterprises (MSMEs) in one of the sub-districts in Surabaya, Indonesia. A quantitative descriptive approach was employed using primary data collected through structured questionnaires. The population consisted of 259 MSMEs, with a sample of 72 respondents selected using Slovin’s formula and simple random sampling. Data collection methods included observation, interviews, and documentation. The hypothesis was tested using Structural Equation Modeling (SEM) with the Partial Least Squares (PLS) approach. The results indicate that financial knowledge and e-payment usage do not have a significant effect on MSME financial performance. In contrast, financial literacy and financial attitude have a significant positive effect. These findings suggest that while digital transaction tools are increasingly accessible, they may not directly enhance performance without a strong foundation in financial literacy and behavior. Therefore, improving MSME financial outcomes may require more focus on building financial capabilities and responsible financial attitudes, beyond just technological adoption.