Seasonal Income Effects on Financial Awareness, Capability, and Risky Behavior in Agro-Industrial MSMEs in East Java

This study examines the role of financial awareness (FA), financial capability (FC), and their influence on risky financial behaviors—risky paying behavior (RPB), risky borrowing behavior (RBB), and financial goals (FGs)—among agro-industrial MSMEs in East Java. This study also explores the moderating effects of expected future financial security (EFFS) and current money management stress (CMMS) in the context of seasonal income fluctuations. This study employed a quantitative approach using structural equation modeling (SEM) with SmartPLS 4. Data were collected through surveys with 287 MSME owners in six cities/regencies in East Java, selected using a random sampling method. The research variables were measured using validated scales adapted from previous studies. FA significantly influenced FC, RPB, and RBB, whereas FC positively impacted FG. RPB had a strong positive effect on FG, whereas RBB showed no significant relationship. The mediation effect of FC between FA and FG was significant, highlighting its pivotal role in achieving FG. However, the moderating effects of EFFS and CMMS on the FC–FG relationship were not significant, suggesting their limited direct impact in this context. This study reveals the urgent need for tailored financial literacy programs that address specific issues faced by MSME owners, such as managing irregular cash flows and minimizing risky financial behavior. Financial institutions should develop accessible financial tools and products for agro-industrial MSMEs.