The Effect of Financial Literacy and Digital Financial Inclusion on Financial Management Among MSME Entrepreneurs in West Aceh Regency

Abstract

MSMEs play a vital role in regional economic development; however, many entrepreneurs still face challenges in managing their finances effectively due to limited financial knowledge and unequal access to financial services. This study addresses the problem by examining whether financial literacy and digital financial inclusion influence financial management among MSME entrepreneurs in West Aceh Regency. Accordingly, the research questions are: (1) Does financial literacy affect financial management? and (2) Does digital financial inclusion affect financial management? This study employs a quantitative approach using primary data collected through questionnaires distributed to MSME entrepreneurs. The sample consists of 96 respondents selected using a random sampling technique from a population of 2,011 MSMEs. Data were analyzed using multiple linear regression to test the proposed hypotheses. The findings reveal that both financial literacy and digital financial inclusion have a positive and significant effect on financial management. MSME entrepreneurs with higher financial knowledge tend to demonstrate better financial planning, budgeting, and control, while access to digital financial services enhances efficiency, accessibility, and transparency in financial transactions. The academic contribution of this study lies in enriching the empirical literature on MSME financial behavior by integrating financial literacy and digital financial inclusion as key determinants of financial management, particularly in the context of developing regions such as West Aceh Regency. These findings also provide practical implications for policymakers to strengthen financial education programs and expand digital financial access to improve MSME sustainability