Analysis of the level and impact of sharia financial literacy on MSME performance

Abstract

This study aims to analyze the effect of Islamic financial literacy on the performance of micro, small, and medium enterprises (MSMEs) in the Greater Jakarta Area. Islamic financial literacy in this research is measured through three dimensions: knowledge, skills, and beliefs. These variables are tested for their simultaneous influence on MSME performance, which includes aspects such as revenue growth, transaction volume, and cash flow management. The study employs a quantitative approach using primary data collected from 50 MSME respondents selected through purposive sampling. The data was obtained by distributing structured questionnaires, and the analysis method used is simple linear regression. The results reveal that Islamic financial literacy has a significant and positive impact on the performance of MSMEs. The coefficient of determination (R²) value of 48.8% indicates that nearly half of the variance in MSME performance can be explained by the level of Islamic financial literacy possessed by business owners. This finding implies that a better understanding and application of Islamic financial principles—such as Islamic financing, investment in sharia-compliant instruments, and the use of Islamic insurance—can contribute meaningfully to improving MSME performance. Therefore, enhancing Islamic financial literacy among MSME actors is crucial in supporting sustainable business growth and strengthening their economic resilience, especially in urban areas like Greater Jakarta Area.