Digital Financial Inclusion, Financial Literacy, and Entrepreneurial Survival The Mediating Role of Digital Finance

Angguliyah Rizqi Amaliyah

doi:10.62794/je3s.v7i2.5

Authors

Angguliyah Rizqi Amaliyah Universitas Islam Raden Rahmat, Indonesia

DOI:

https://doi.org/10.62794/je3s.v7i2.5

Keywords:

digital financial inclusion, financial literacy, digital finance, entrepreneurial survival

Abstract

This study examines the impact of digital financial inclusion and financial literacy on entrepreneurial survival by considering the mediating role of digital finance. This issue is particularly relevant as the failure rate of micro, small, and medium enterprises (MSMEs) in Indonesia remains relatively high due to limited access to financing, low financial literacy, and disparities in digital technology adoption. Unlike most previous studies that primarily focus on direct relationships or macro-level impacts of digital financial inclusion, this study investigates the mediating mechanism of digital finance in the relationship between digital financial inclusion, financial literacy, and entrepreneurial survival at the micro-enterprise level. The study employs a quantitative approach using survey data collected from 150 entrepreneurs in Indonesia. The data were analyzed using path analysis and the Sobel mediation test to examine both direct and indirect effects among variables. The findings reveal that digital financial inclusion and financial literacy have a positive and significant effect on entrepreneurial survival. Furthermore, digital finance is proven to significantly mediate the relationship between these variables and business survival. These results provide empirical evidence that the utilization of digital financial services acts as a critical mechanism linking financial access and financial capability to business sustainability. The study contributes to the literature by highlighting the strategic role of digital finance in strengthening entrepreneurial resilience in the digital economy.

References

Abu, N., da Silva, F. P., & Vieira, P. R. (2025). Government support for SMEs in the Fintech Era: Enhancing access to finance, survival, and performance. Digital Business, 5(1), 100099. https://doi.org/10.1016/j.digbus.2024.100099

Al-shami, S. A., Damayanti, R., Adil, H., Farhi, F., & Al mamun, A. (2024). Financial and digital financial literacy through social media use towards financial inclusion among batik small enterprises in Indonesia. Heliyon, 10(15), e34902. https://doi.org/10.1016/j.heliyon.2024.e34902

Aristei, D., Gallo, M., & Vannoni, V. (2024). Preferences for ethical intermediaries and sustainable investment decisions in micro-firms: The role of financial literacy and digital financial capability. Research in International Business and Finance, 71, 102483. https://doi.org/10.1016/j.ribaf.2024.102483

Avlijaš, G., Avlijaš, R., & Heleta, M. (2014). Financial Literacy As A Factor In Reducing Entrepreneurial Risk. Proceedings of the 1st International Scientific Conference - FINIZ 2014, 112–114. https://doi.org/10.15308/finiz-2014-112-114

Ayu Priandari, R., Darmansyah, D., Harnovinsah, H., & Ahmar, N. (2024). Dampak Keuangan Digital terhadap Inklusi Keuangan dan Pertumbuhan Hijau: Peran Mediasi dan Moderasi. Jurnal Greenation Ilmu Akuntansi, 2(2), 91–104. https://doi.org/10.38035/jgia.v2i2.70

Aziz, A., & Naima, U. (2021). Rethinking digital financial inclusion: Evidence from Bangladesh. Technology in Society, 64, 101509. https://doi.org/10.1016/j.techsoc.2020.101509

Bai, H., Wu, Y., & Wang, R. (2023). Does digital financial inclusion lead to regional differences in trade credit financing?: A quasi-natural experiment. Economic Analysis and Policy, 80, 1475–1489. https://doi.org/10.1016/j.eap.2023.10.023

Basha, S. A., Bennasr, H., & Goaied, M. (2023). Financial literacy, financial development, and leverage of small firms. International Review of Financial Analysis, 86, 102510. https://doi.org/10.1016/j.irfa.2023.102510

Bollaert, H., Lopez-de-Silanes, F., & Schwienbacher, A. (2021). Fintech and access to finance. Journal of Corporate Finance, 68, 101941. https://doi.org/10.1016/j.jcorpfin.2021.101941

Borjigin, W., He, S., & Xu, H. (2025). The role of digital financial inclusion in promoting common prosperity: Evidence from Inner Mongolia. International Review of Financial Analysis, 100, 103996. https://doi.org/10.1016/j.irfa.2025.103996

Bruhn, M., & Zia, B. (2013). Stimulating managerial capital in emerging markets: the impact of business training for young entrepreneurs. Journal of Development Effectiveness, 5(2), 232–266. https://doi.org/10.1080/19439342.2013.780090

Buchak, G., Matvos, G., Piskorski, T., & Seru, A. (2018). Fintech, regulatory arbitrage, and the rise of shadow banks. Journal of Financial Economics, 130(3), 453–483. https://doi.org/10.1016/j.jfineco.2018.03.011

Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31(6), 515–524. https://doi.org/10.1016/S0019-8501(01)00203-6

Calderon, G., Cunha, J. M., & Giorgi, G. De. (2020). Business Literacy and Development: Evidence from a Randomized

Controlled Trial in Rural Mexico. Economic Development and Cultural Change, 68(2), 507–540.

https://doi.org/10.1086/701213

Cao, S., Nie, L., Sun, H., Sun, W., & Taghizadeh-Hesary, F. (2021). Digital finance, green technological innovation and energy-environmental performance: Evidence from China’s regional economies. Journal of Cleaner Production, 327, 129458. https://doi.org/10.1016/j.jclepro.2021.129458

Ćumurović, A., & Hyll, W. (2019). Financial Literacy and Self‐Employment. Journal of Consumer Affairs, 53(2), 455–487. https://doi.org/10.1111/joca.12198

Diptyana, P., Rokhmania, N., & Herlina, E. (2022). Financial Literacy, Digital Literacy and Financing Preferences Role to Micro and Small Enterprises’ Performance. IJEBD (International Journal of Entrepreneurship and Business Development), 5(2), 346–358. https://doi.org/10.29138/ijebd.v5i2.1785

Dutta, N., & Sobel, R. S. (2018). Entrepreneurship and human capital: The role of financial development. International Review of Economics & Finance, 57, 319–332. https://doi.org/10.1016/j.iref.2018.01.020

Fan, H., Peng, B., & Qu, J. (2024). Financial literacy, entrepreneurial activity and entrepreneurial motivation. Finance Research Letters, 68, 105982. https://doi.org/10.1016/j.frl.2024.105982

Frimpong, S. E., Agyapong, G., & Agyapong, D. (2022). Financial literacy, access to digital finance and performance of SMEs: Evidence From Central region of Ghana. Cogent Economics & Finance, 10(1). https://doi.org/10.1080/23322039.2022.2121356

Fu, P., Ramchandran, R., Dudek, S. M., Parinandi, N. L., & Natarajan, V. (2022). Regulation of Vascular Endothelial Barrier Integrity and Function by Lipid-Derived Mediators. In Cardiovascular Signaling in Health and Disease (pp. 445–484). Springer International Publishing. https://doi.org/10.1007/978-3-031-08309-9_17

Geng, Z., & He, G. (2021). Digital financial inclusion and sustainable employment: Evidence from countries along the belt and road. Borsa Istanbul Review, 21(3), 307–316. https://doi.org/10.1016/j.bir.2021.04.004

Gimeno, J., Folta, T. B., Cooper, A. C., & Woo, C. Y. (1997). Survival of the Fittest? Entrepreneurial Human Capital and the Persistence of Underperforming Firms. Administrative Science Quarterly, 42(4), 750. https://doi.org/10.2307/2393656

Hao, Y., Zhang, B., & Yin, H. (2023). Can digital finance drive urban–rural integration? Economic Research-Ekonomska Istraživanja, 36(2). https://doi.org/10.1080/1331677X.2023.2169736

Hasan, M., Jannah, M., Supatminingsih, T., Ahmad, M. I. S., Sangkala, M., Najib, M., & Elpisah. (2024). Understanding the role of financial literacy, entrepreneurial literacy, and digital economic literacy on entrepreneurial creativity and MSMEs success: a knowledge-based view perspective. Cogent Business & Management, 11(1). https://doi.org/10.1080/23311975.2024.2433708

Hongli, J. (2021). Can Digital Finance Improve Enterprise Total Factor Productivity？Empirical Evidence from Chinese Listed Companies. Journal of Shanghai University of Finance and Economics, 23(03), 3–18. https://doi.org/10.16538/j.cnki.jsufe.2021.03.001

Huang, S., Yang, L., Yang, C., Wang, D., & Li, Y. (2024). Obscuring effect of income inequality and moderating role of financial literacy in the relationship between digital finance and China’s household carbon emissions. Journal of Environmental Management, 351, 119927. https://doi.org/10.1016/j.jenvman.2023.119927

Hui, P., Zhao, H., Liu, D., & Li, Y. (2023). How does digital finance affect regional innovation capacity? A spatial econometric analysis. Economic Modelling, 122, 106250. https://doi.org/10.1016/j.econmod.2023.106250

Iltizam Fairuzi, M., EkoPujianto, W., Lucy Larassaty, A., & Sholikhah, A. (2025). Building Resilient Entrepreneurship: How Financial Literacy and Digital Inclusion Drive Performance in SMEs? Jurnal Manajemen Dan Organisasi, 16(2), 177–197. https://doi.org/10.29244/jmo.v16i2.63697

Justita Dura, D. W. (2024). The Sustainability Role of Women Entrepreneurs through the Digital Financial Literacy Movement. Population Economics, 8(3), 108–123. https://populationandeconomics.pensoft.net/article/116923/

Kapoor, A. (2014). Financial inclusion and the future of the Indian economy. Futures, 56, 35–42. https://doi.org/10.1016/j.futures.2013.10.007

Karlan, D., & Valdivia, M. (2011). Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions. Review of Economics and Statistics, 93(2), 510–527. https://doi.org/10.1162/REST_a_00074

Khan, S. Z., Yang, Q., & Waheed, A. (2019). Investment in intangible resources and capabilities spurs sustainable competitive advantage and firm performance. Corporate Social Responsibility and Environmental Management, 26(2), 285–295. https://doi.org/10.1002/csr.1678

Kimmitt, J., Muñoz, P., & Newbery, R. (2020). Poverty and the varieties of entrepreneurship in the pursuit of prosperity. Journal of Business Venturing, 35(4), 105939. https://doi.org/10.1016/j.jbusvent.2019.05.003

Kong, T., Sun, R., Sun, G., & Song, Y. (2022). Effects of Digital Finance on Green Innovation considering Information Asymmetry: An Empirical Study Based on Chinese Listed Firms. Emerging Markets Finance and Trade, 58(15), 4399–4411. https://doi.org/10.1080/1540496X.2022.2083953

Kurniasari, F., Abd Hamid, N., & Lestari, E. D. (2025). Unraveling the impact of financial literacy, financial technology adoption, and access to finance on small medium enterprises business performance and sustainability: a serial mediation model. Cogent Business & Management, 12(1). https://doi.org/10.1080/23311975.2025.2487837

Lee, C.-C., Lou, R., & Wang, F. (2023). Digital financial inclusion and poverty alleviation: Evidence from the sustainable development of China. Economic Analysis and Policy, 77, 418–434. https://doi.org/10.1016/j.eap.2022.12.004

Li, B., & Pan, Y. (2025). Digital inclusive finance and rural entrepreneurial survival: The moderating role of digital and financial literacy. Economic Analysis and Policy, 86, 1119–1136. https://doi.org/10.1016/j.eap.2025.04.025

Li, J., & Li, B. (2022). Digital inclusive finance and urban innovation: Evidence from China. Review of Development Economics, 26(2), 1010–1034. https://doi.org/10.1111/rode.12846

Li, J., Wu, Y., & Xiao, J. J. (2020). The impact of digital finance on household consumption: Evidence from China. Economic Modelling, 86, 317–326. https://doi.org/10.1016/j.econmod.2019.09.027

Li, Y., Guo, Z., Hua, H., & Li, W. (2024). An empirical analysis of cultural differences in overseas tourism: How do they affect self-determination theory (SDT) needs by age? International Journal of Intercultural Relations, 99, 101936. https://doi.org/10.1016/j.ijintrel.2024.101936

Li, Y., Nie, F.-J., & Yan, Z.-B. (2021). Age and Geochemistry of Late Jurassic Mafic Volcanic Rocks in the Northwestern Erguna Block, Northeast China. Minerals, 11(9), 1010. https://doi.org/10.3390/min11091010

Li, Z., Chen, H., & Mo, B. (2023). Can digital finance promote urban innovation? Evidence from China. Borsa Istanbul Review, 23(2), 285–296. https://doi.org/10.1016/j.bir.2022.10.006

Linder, C., Lechner, C., & Pelzel, F. (2020). Many Roads Lead to Rome: How Human, Social, and Financial Capital Are Related to New Venture Survival. Entrepreneurship Theory and Practice, 44(5), 909–932. https://doi.org/10.1177/1042258719867558

Lu, X., Zhang, X., Guo, J., & Yue, P. (2024). Digital finance era: Will individual investors become better players? Journal of International Financial Markets, Institutions and Money, 91, 101935. https://doi.org/10.1016/j.intfin.2024.101935

Molina-García, A., Diéguez-Soto, J., Galache-Laza, M. T., & Campos-Valenzuela, M. (2023). Financial literacy in SMEs: a bibliometric analysis and a systematic literature review of an emerging research field. Review of Managerial Science, 17(3), 787–826. https://doi.org/10.1007/s11846-022-00556-2

Ocharive, A., & Iworiso, J. (2024). The Impact of Digital Financial Services on Financial Inclusion: A Panel Data Regression Method. International Journal of Data Science and Analysis, 10(2), 20–32. https://doi.org/10.11648/j.ijdsa.20241002.11

Ozili, P. K. (2018). Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review, 18(4), 329–340. https://doi.org/10.1016/j.bir.2017.12.003

Pal, A., Herath, T., De’, R., & Raghav Rao, H. (2021). Why do people use mobile payment technologies and why would they continue? An examination and implications from India. Research Policy, 50(6), 104228. https://doi.org/10.1016/j.respol.2021.104228

Panjaitan, J. M., Timur, R. P., & Sumiyana, S. (2021). How does the Government of Indonesia empower SMEs? An analysis of the social cognition found in newspapers. Journal of Entrepreneurship in Emerging Economies, 13(5), 765–790. https://doi.org/10.1108/JEEE-04-2020-0087

Pierrakis, Y., & Collins, L. (2013). Crowdfunding: A New Innovative Model of Providing Funding to Projects and Businesses. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2395226

Potrich, A. C. G., Vieira, K. M., & Kirch, G. (2018). How well do women do when it comes to financial literacy? Proposition of an indicator and analysis of gender differences. Journal of Behavioral and Experimental Finance, 17, 28–41. https://doi.org/10.1016/j.jbef.2017.12.005

Pratama, I., Rismawati, R., Pribadi, I., Aqsa, M., & Duriani, D. (2024). Digital Finance And Financial Literacy: Key Drivers Of Msme Success In Emerging Economies. International Journal of Entrepreneurship and Management Practices, 7(27), 01–11. https://doi.org/10.35631/IJEMP.727001

Qinqin, W., Qalati, S. A., Hussain, R. Y., Irshad, H., Tajeddini, K., Siddique, F., & Gamage, T. C. (2023). The effects of enterprises’ attention to digital economy on innovation and cost control: Evidence from A-stock market of China. Journal of Innovation & Knowledge, 8(4), 100415. https://doi.org/10.1016/j.jik.2023.100415

Raya, A. B., Andiani, R., Siregar, A. P., Prasada, I. Y., Indana, F., Simbolon, T. G. Y., Kinasih, A. T., & Nugroho, A. D. (2021). Challenges, Open Innovation, and Engagement Theory at Craft SMEs: Evidence from Indonesian Batik. Journal of Open Innovation: Technology, Market, and Complexity, 7(2), 121. https://doi.org/10.3390/joitmc7020121

Robb, A. M., & Robinson, D. T. (2014). The Capital Structure Decisions of New Firms. Review of Financial Studies, 27(1), 153–179. https://doi.org/10.1093/rfs/hhs072

Santos, S. C., Costa, S., & Morris, M. H. (2022). Entrepreneurship as a pathway into and out of poverty: a configuration perspective. Entrepreneurship & Regional Development, 34(1–2), 82–109. https://doi.org/10.1080/08985626.2022.2030413

Sarma, M., & Pais, J. (2011). Financial Inclusion and Development. Journal of International Development, 23(5), 613–628. https://doi.org/10.1002/jid.1698

Sayinzoga, A., Bulte, E. H., & Lensink, R. (2016). Financial Literacy and Financial Behaviour: Experimental Evidence from Rural Rwanda. The Economic Journal, 126(594), 1571–1599. https://doi.org/10.1111/ecoj.12217

Setiawan, M., Effendi, N., Santoso, T., Dewi, V. I., & Sapulette, M. S. (2022). Digital financial literacy, current behavior of saving and spending and its future foresight. Economics of Innovation and New Technology, 31(4), 320–338. https://doi.org/10.1080/10438599.2020.1799142

She, L., Rasiah, R., Weissmann, M. A., & Kaur, H. (2024). Using the Theory of Planned Behaviour to Explore Predictors of Financial Behaviour Among Working Adults in Malaysia. FIIB Business Review, 13(1), 118–135. https://doi.org/10.1177/23197145231169336

Shen, Y., Hueng, C. J., & Hu, W. (2020). Using digital technology to improve financial inclusion in China. Applied Economics Letters, 27(1), 30–34. https://doi.org/10.1080/13504851.2019.1606401

Siddik, A. B., Rahman, M. N., & Yong, L. (2023). Do fintech adoption and financial literacy improve corporate sustainability performance? The mediating role of access to finance. Journal of Cleaner Production, 421, 137658. https://doi.org/10.1016/j.jclepro.2023.137658

Su, L., Peng, Y., & Kong, R. (2024). Financial literacy, farmland mortgage financing, and household entrepreneurship: Empirical evidence from rural China. Journal of Asian Economics, 94, 101767. https://doi.org/10.1016/j.asieco.2024.101767

Sun, J., & Zhang, J. (2024). Digital Financial Inclusion and Innovation of MSMEs. Sustainability, 16(4), 1404. https://doi.org/10.3390/su16041404

Susan, M. (2020). Financial Literacy and Growth of Micro, Small, and Medium Enterprises in West Java, Indonesia (pp. 39–48). https://doi.org/10.1108/S1571-038620200000027004

Thinis, F. (2024). Financial Inclusion: Impact of Digital Finance Worldwide. International Journal of Accounting Research, 12(2). https://doi.org/DOI: 10.35248/2472-114X.24.12.386

Tian, G., Zhou, S., & Hsu, S. (2020). Executive financial literacy and firm innovation in China. Pacific-Basin Finance Journal, 62, 101348. https://doi.org/10.1016/j.pacfin.2020.101348

Triwahyuni, D. (2022). Indonesia Digital Economic Diplomacy during the Covid-19 Global Pandemic. Journal of Eastern European and Central Asian Research (JEECAR), 9(1), 75–83. https://doi.org/10.15549/jeecar.v9i1.880

Wang, A. X., & Zhou, K. Z. (2022). Financial munificence, R&D intensity, and new venture survival: critical roles of CEO attributes. Small Business Economics, 59(4), 1641–1659. https://doi.org/10.1007/s11187-021-00592-4

Wang, X., & Fu, Y. (2022). Digital financial inclusion and vulnerability to poverty: evidence from Chinese rural households. China Agricultural Economic Review, 14(1), 64–83. https://doi.org/10.1108/CAER-08-2020-0189

Wang, X., & Wang, Q. (2021). Research on the impact of green finance on the upgrading of China’s regional industrial structure from the perspective of sustainable development. Resources Policy, 74, 102436. https://doi.org/10.1016/j.resourpol.2021.102436

Wennberg, K., Wiklund, J., DeTienne, D. R., & Cardon, M. S. (2010). Reconceptualizing entrepreneurial exit: Divergent exit routes and their drivers. Journal of Business Venturing, 25(4), 361–375. https://doi.org/10.1016/j.jbusvent.2009.01.001

Widyastuti, M., Ferdinand, D. Y. Y., & Hermanto, Y. B. (2023). Strengthening Formal Credit Access and Performance through Financial Literacy and Credit Terms in Micro, Small and Medium Businesses. Journal of Risk and Financial Management, 16(1), 52. https://doi.org/10.3390/jrfm16010052

Xie, Y., & Chen, T. (2024). A Study on the Impact of Digital Financial Literacy on Household Entrepreneurship—Evidence from China. Sustainability, 17(1), 117. https://doi.org/10.3390/su17010117

Xu, N., Shi, J., Rong, Z., & Yuan, Y. (2020). Financial literacy and formal credit accessibility: Evidence from informal businesses in China. Finance Research Letters, 36, 101327. https://doi.org/10.1016/j.frl.2019.101327

Yang, J., Wu, Y., & Huang, B. (2023). Digital finance and financial literacy: Evidence from Chinese households. Journal of Banking & Finance, 156, 107005. https://doi.org/10.1016/j.jbankfin.2023.107005

Yao, L., & Yang, X. (2022). Can digital finance boost SME innovation by easing financing constraints?: Evidence from Chinese GEM-listed companies. PLOS ONE, 17(3), e0264647. https://doi.org/10.1371/journal.pone.0264647

Yao, W. (2023). The Impact of Digital Finance on the Resilience of Open City Economic Development. Journal of Service Science and Management, 16(05), 592–602. https://doi.org/10.4236/jssm.2023.165031

Yu, L., & Artz, G. M. (2019). Does rural entrepreneurship pay? Small Business Economics, 53(3), 647–668. https://doi.org/10.1007/s11187-018-0073-x

Yu, W., Wang, L., Liu, X., Xie, W., & Zhang, M. (2024). Can digital inclusive finance promote high-quality rural entrepreneurship? A county-level analysis from China. Finance Research Letters, 67, 105820. https://doi.org/10.1016/j.frl.2024.105820

Zhang, Y., Mi, X., Li, H., & Wang, X. (2025). Evolutionary game analysis of digital inclusive finance for high-quality development of small and medium-sized enterprises. International Review of Financial Analysis, 105, 104388. https://doi.org/10.1016/j.irfa.2025.104388