Fadali Rahman, Heri Pratikto, F. Danardana Murwani, Puji Handayati
The purpose of this study is to examine the relationship between financial literacy and business performance by analyzing the multidimensional model. Specifically, the study will look at the relationship between financial literacy and loan repayment commitment, which in turn influences business success. The study also explores the mediating role of loan repayment commitment and the moderating role of business innovation in shaping the relationship between financial literacy and the performance of micro and small enterprises (MSEs) on Madura Island. Lastly, it looks at how financial literacy, moderated by business innovation, affects business performance. Hierarchical regression analysis is used in this study's quantitative research methodology to assess the moderating effects. With a sample size of 373 companies, the target demographic consists of micro and small enterprises (MSEs) in the food and beverage industry. With the aid of AMOS version 24 software, data analysis was done using structural equation modeling (SEM) to look into the correlations between variables and evaluate the suggested hypotheses. The results of this investigation show multiple direct and indirect links between exogenous and endogenous variables. In particular, it has been discovered that financial literacy significantly and favorably affects MSEs' ability to do business. Financial literacy, on the other hand, has little effect on loan repayment commitment, and loan repayment commitment has little effect on MSE performance. However, business innovation acts as a moderator, improving the direct and indirect effects of financial literacy on MSE business performance through the promise to repay loans. To further strengthen the entire model, loan repayment commitment acts as a mediator in the relationship between financial literacy and MSE company performance. © 2026, SRAC - Romanian Society for Quality. All rights reserved.
Faculty of Economics and Business, Universitas Negeri Malang, Universitas Madura, Jawa Timur, Indonesia; Faculty of Economics and Business, Universitas Negeri Malang, Jawa Timur, Indonesia
