Bridging Knowledge to Growth: How Financial Education Empowers Small Enterprises

This study examines the effectiveness of financial literacy training interventions for Micro, Small, and Medium Enterprises (MSMEs) in Indonesia—the research aimed to enhance financial management capabilities among MSME owners. The study surveyed 82 MSME participants. Data were analysed using descriptive statistics, reliability analysis (Cronbach's Alpha = 0.94), Spearman correlation, Principal Component Analysis (PCA), and regression analysis. Results identified five key components of financial literacy: Spending and savings Behaviour, Financial Planning and budgeting, Investment Knowledge, Risk Management, and Retirement and debt Management. PCA and cluster analysis revealed two distinct groups: a "Moderate Financial Literacy" cluster and a "Highly Aware and Disciplined" cluster. Statistically significant differences (p < 0.05) were found between two groups across 20 financial literacy aspects, with the High Literacy group demonstrating superior budgeting, investment knowledge, and debt management skills. While years of business operation showed a marginally significant relationship with financial literacy (p = 0.062), age was not a significant predictor (p = 0.293). The study concludes that targeted financial literacy interventions can significantly improve MSME owners' financial management practices, contributing to enhanced business performance and sustainability. These findings emphasise the importance of comprehensive financial education programs, particularly focusing on budgeting, financial responsibility, and debt management skills.