Digital Financial Literacy and Its Influence on Investment Decision-Making among SMEs

Abstract

This study examines the influence of digital financial literacy on investment decision-making among small and medium enterprises (SMEs) in Bali, with financial behavior acting as a mediating variable. The increasing adoption of digital financial services among SMEs highlights the importance of financial literacy in supporting effective business investment decisions. This research aims to analyze the direct and indirect relationships between digital financial literacy, financial behavior, and investment decision-making. The study employed a quantitative approach using a survey method. Data were collected from 98 SME owners and managers in Bali who actively use digital financial services such as mobile banking, QRIS, e-wallets, and online payment platforms. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) through SmartPLS. The results indicate that digital financial literacy has a positive effect on financial behavior and investment decision-making. Financial behavior also positively influences investment decision-making and partially mediates the relationship between digital financial literacy and investment decision-making. The findings suggest that SMEs with higher levels of digital financial literacy tend to demonstrate better financial behavior, which contributes to more effective and rational investment decisions. This study contributes to the literature on digital finance and SME development by emphasizing the importance of improving digital financial literacy to strengthen investment capability and business sustainability among SMEs in Bali.