The impact of enhancing digital financial literacy on firm performance: evidence from digitalisation in Indonesia

This study explores and analyses the impact of digital financial literacy and digital finance on the firm performance of MSMEs, as well as the mediating role of digital finance. Using a quantitative method with an explanatory approach on 400 MSMEs in East Java, the SEM-PLS analysis results indicate that digital financial literacy significantly enhances firm performance, and digital finance serves as an effective mediator. The findings of this study reveal that combining digital literacy and financial literacy into the concept of digital financial literacy creates a unique asset for firms and acts as a key catalyst in improving firm performance. Additionally, this study emphasises that digital finance plays an important role as a bridge in the application of digital financial literacy, shaping unique intangible assets. The uniqueness and differentiation in firm resources are the main characteristics of the resource-based view application, thus the research is expected to provide strategic contributions to support the digitalisation program of MSMEs in Indonesia.