THE EFFECT OF FINANCIAL LITERACY AND DIGITAL FINANCIAL INNOVATION ON THE PERFORMANCE OF MSME BUSINESS IN BALI WITH ACCESS TO FINANCING AS A MODERATING VARIABLE

Abstract

Micro, Small, and Medium Enterprises (MSMEs) are the backbone of the Indonesian economy, yet many, particularly those in the culture-based creative sector, struggle to translate financial knowledge and digital tools into sustainable business performance. This study analyzes the influence of financial literacy and digital financial innovation on MSME business performance in Bali and examines whether access to financing moderates this relationship. Using a quantitative approach grounded in the Resource-Based View (RBV) theory, data were collected through structured questionnaires distributed to 384 MSMEs selected through probability sampling using the Krejcie and Morgan formula. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM), including moderation analysis using a product-indicator approach. The results show that financial literacy, digital financial innovation, and access to financing each have a positive and significant effect on business performance. Access to financing significantly strengthens the relationship between financial literacy and business performance, while its moderating effect on the relationship between digital financial innovation and business performance is not statistically proven. These findings indicate that improving MSME performance requires an integrated strategy that combines financial capabilities, digital adoption, and equitable access to formal financial services. This research offers practical implications for policymakers and financial institutions in enhancing the competitiveness and sustainability of culture-based MSMEs.