Strengthening MSME Financial Management through Digital Financial Literacy

Abstract

Digital transformation has reshaped how micro, small, and medium enterprises manage financial resources, yet limited digital financial literacy continues to constrain effective financial decision-making. This study examines the role of digital financial literacy in strengthening financial management practices among MSMEs. A quantitative cross-sectional design was employed using survey data collected from 150 MSME owners through a structured questionnaire. The data were analyzed using descriptive statistics and simple linear regression. The findings indicate that digital financial literacy has a positive and statistically significant effect on financial management practices. MSME owners with stronger knowledge of digital payments, online banking, financial applications, cybersecurity, and digital recordkeeping demonstrated better budgeting, cash-flow monitoring, financial separation, and expenditure control. Digital financial literacy also explained a meaningful proportion of variation in financial management performance. These findings highlight that strengthening digital financial capabilities is not merely technological adaptation but a strategic mechanism for improving financial discipline, resilience, and long-term business sustainability among MSMEs in increasingly digital business environments.