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Archives of Business Review – Vol. 9, No.1
Publication Date: January 25, 2021
DOI: 10.14738/abr.91.9582. Untu, V. (2021). The Effect Of Financial Literation Implementation On The Performance Of Financial Management In Middle Small
Micro Enterprises In Tomohon City. Archives of Business Research, 9(1). 106-115.
The Effect Of Financial Literation Implementation On The
Performance Of Financial Management In Middle Small Micro
Enterprises In Tomohon City
Victoria N. Untu
Faculty of Economic and Business Sam Ratulangi University; Indonesia
ABSTRACT
The research that will be carried out by the team refers to one of the
Higher Education Research Master Plans, in this case Sam Ratulangi
University, which is about matters related to the social, humanities
and culture fields, with the topic of increasing the competitiveness of
MSMEs and cooperatives. In this 21st century, the ability to manage
money and finances effectively is becoming increasingly important,
not only for professionals but for everyone who is responsible for
managing financial affairs in everyday life. This ability is included in
the term financial literacy. Financial literacy is not limited to
understanding knowledge, skills and beliefs of existing financial
institutions, products and services, but attitudes and behavior also
have an influence in increasing financial literacy for the realization of
public welfare. This study aims to determine how much influence the
implementation of financial literacy has on financial management for
MSME actors in Tomohon City. As for the sample in this study are the
70 micro, small and medium enterprises in Tomohon city. The final
result or output of this research is in the form of a study on the
implementation of good financial literacy in financial management
performance in micro, small and medium enterprises in Tomohon city
In addition, what is also the outcome of this research is the
publication of National and International Journals.
Keywords: financial literacy, financial management, MSMEs
INTRODUCTION
Currently, in facing the era of the ASEAN Economic Community (AEC), good management,
transparent and accountable financial management, as well as the ability to produce an
innovation that is different from competitors is needed for the realization of business continuity
in the midst of competition in the global market. The business world has experienced a setback
due to the fact that many business actors fail to manage their company's finances properly and
effectively.
Micro, Small and Medium Enterprises (MSMEs) have long been understood to have a significant
role in the economic growth of a country. The presence of these micro, small and medium
enterprises has proven their contribution to efforts to increase commercial interest rates in
general (Ministry of Finance of the Republic of Indonesia, 2015). This is closely related to the
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Archives of Business Research (ABR) Vol 9, Issue 1, January-2021
existence of the creative economy, which is part of the micro, small, and medium enterprises in
Indonesia. The big role of the creative economy is in optimizing the existing resources in the State
of Indonesia, not only in terms of exploiting rich natural resources but also in pouring ideas into
business creativity that creates many new businesses that were never thought of before.
The presence of MSMEs in the economic activity of a country is eagerly awaited, because the
existence of micro, small and medium business actors opens opportunities for the economic
growth of a country. However, it is unfortunate when the presence of MSMEs often does not last
long because they cannot manage their business finances properly and properly so that their
business continuity is not maintained. The problems faced by most of the MSME players are
conventional problems that have not been resolved completely, such as issues of resource
capacity, ownership, financing, marketing and various other problems related to financial
management, so that MSMEs have difficulty competing with large companies.
Managing finances is a reality that must be faced by every human being in his daily life , where
one must manage finances properly in order to balance income and expenses, be able to meet the
needs of life and not get caught in financial difficulties. Therefore, financial intelligence is
something that needs to be considered in today's modern life. Financial intelligence is the ability
that a person has to manage his / her financial resources, with financial well-being as the ultimate
goal. Financial literacy is closely related to financial management where the higher one's financial
literacy is, the better one's financial management will be. Financial management is an application
of financial management concepts at the individual level. Financial management which includes
planning, management and financial control activities is very important to achieve financial
prosperity. Planning activities include activities to plan the allocation of income earned will
be used for anything. Management is an activity to regulate or manage finances efficiently while
control is an activity to evaluate whether financial management is in accordance with what was
planned or budgeted for.
Managing or managing business and business finances effectively is a method to maintain the
rate or flow of company funds so that there are no leaks that lead to financial
losses. Financial management is generally an activity of managing funds in daily life carried out
by an individual or group with the aim of obtaining financial welfare . In achieving this
prosperity, good financial management is needed so that money can be used as needed and not
wasted. To be able to implement a good financial management process, it requires financial
responsibility to carry out the process of managing money and other assets in a way that is
considered positive. The financial management process is an activity that is very important to be
carried out by business actors, including for the people's economy, the majority of which are
Micro, Small and Medium Enterprises (MSMEs). UMKM is a form of small community business
whose establishment is based on someone's initiative. According to Kerry (2010), the role of
MSMEs is very strategic in the economy as one of the main driving forces in economic
development.
Based on the description above, the research team is interested in conducting a study entitled
"The Effect of Financial Literacy Implementation on Financial Management Performance in Micro,
Small and Medium Enterprises in Tomohon City "