THE INFLUENCE OF FINANCIAL LITERACY AND FINANCIAL INCLUSION IN INCREASING THE USE OF FINANCIAL TECHNOLOGY IN MSMEs IN KUPANG CITY

Abstract

The rapid growth of digital technology has led to the rise of financial technology (fintech) as an innovative financial service that is fast, efficient, and easily accessible to Micro, Small, and Medium Enterprises (MSMEs). This study aims to examine the influence of financial literacy and financial inclusion on fintech usage among MSMEs in Kupang City. A quantitative approach was applied using a survey method involving 32 MSME respondents. The independent variables are financial literacy and financial inclusion, while the dependent variable is fintech usage. Data were analyzed using multiple linear regression with the Partial Least Square (PLS) method through SmartPLS 4.0 software. The results reveal that financial literacy has no significant effect on fintech usage (t-statistic = 1.223; p-value = 0.221), while financial inclusion shows a significant positive effect (t-statistic = 3.893; p-value = 0.000). These findings suggest that access to formal financial services is the main factor driving fintech adoption among MSMEs. The study emphasizes the need to enhance financial inclusion and digital literacy through collaboration among governments, financial institutions, and educational entities to build an inclusive and sustainable digital financial ecosystem.

Keywords: Fintech; Financial Literacy; Financial Inclusion; MSMEs