The Mediating Effect of Access to Capital in the Impact of Financial Literacy and Financial Inclusion on SME Sustainability

This study aims to examine the mediating role of access to capital in the impact of financial literacy and financial inclusion on SME sustainability. The object of the study is SMEs in Bali operating in the fashion sector. The total sample consisted of 277 SME leaders. Data was collected using a questionnaire tested with PLS-SEM. The results showed a significant and direct influence of financial literacy and financial inclusion on access to capital. Meanwhile, neither financial literacy nor financial inclusion by itself has a significant effect on SME sustainability. Only access to capital has a significant impact on SME sustainability. However, our findings show that access to capital can play a significant role in mediating the impact of financial literacy and financial inclusion on SME sustainability. In the context of SMEs, the results of the current study will be of particular interest to businesses focusing on fashion, showing that access to capital is an essential pillar in addition to financial literacy and inclusion. Access to capital is used as a mediating variable in the model for SME sustainability, whereas previous papers only focused on the influence of financial inclusion and financial literacy on SME sustainability. Including access to capital provides greater research insight. Our results show that, to develop, SMEs must foster financial management and instill technological knowledge to facilitate access to information on financial institution services.