Strengthening Formal Credit Access and Performance through Financial Literacy and Credit Terms in Micro, Small and Medium Businesses

Abstract

This study aims to test financial literacy and credit conditions in determining formal credit access to determine the performance of MSMEs. This research includes the type of associative research that is accompanied by hypothesis testing. This research was conducted on MSMEs of as many as 324 creative industry players in four cities in East Java (Mojokerto, Pasuruan, Gresik, and Sidoarjo) with a sample size of 100 actors who had accessed formal credit using the stratified random sampling method for data collection. The results of Smart PLS analysis show that financial literacy and credit terms directly and significantly affect access to formal credit and MSME performance; formal credit access directly and significantly affects MSME performance. Likewise, financial literacy and credit terms indirectly affect the performance of MSMEs. These results mean that financial literacy and credit terms have a strategic role in explaining why access to formal credit is growing and is attracting MSMEs to strengthen capital to improve performance.

Blended Finance: A Tool for Inciting Commercial Financial Institutions to Provide Financing for Machinery Acquisition for SMEs in Cameroon

“…This goes in line with the position of Jung (2020) as well as Vikas, and Hari, (2023) who point out that blended finance is quite adaptable and can be adjusted to fit the local context. Though this is relatively recent, thus requiring further research, Widyastuti, et al (2023) Kamta et al, 2020). Given the results from the analysis as well as reports from the literature, it is safe to state that blended finance will significantly increase the willingness of financial institutions…”

“…Despite its relevance, studies on blended finance adaptation to SME financing in Cameroon are almost inexistent. This can be considered part of the problem on the general problem of lack of studies on blended finance since the focus on blended finance is still growing Widyastuti, et al, 2023).…”

“…Though relatively recent (Widyastuti, et al, 2023), early studies are reporting positive results on the usage of blended finance. Pamplona, et al (2023), report the positive result of the usage of this tool as leverage to mobilize private finance for sustainable developmental goals.…”

“…In addition to the above, Widyastuti, et al (2023) point out that there is growing research interest in blended finance. , even argues that the blended finance tool can be used to bridge gaps in investment and the mechanism can pull commercial finances to otherwise neglected sectors or activities.…”

Credit Performance of the Private and Public Sector Banks Towards the Personal Loan - A Comparative Study

“…The period of time being fixed has resulted in the bound return of payment by individuals within the scheduled date. Widyastuti et al (2023), have opined that individuals have opted for public sector banks for personal loans because of low rates of interest. The interest rate has been observed to be lower than the rate of private banks in the United Kingdom.…”