GOVERNMENT POLICY SUPPORT AND MSME DEVELOPMENT: EVIDENCE FROM SUBANG CITY,WEST JAVA,INDONESIA

Abstract

Financial literacy plays an important role in improving financial decision-making and financial management practices among business owners, particularly Micro, Small, and Medium Enterprises (MSMEs). Many MSMEs face challenges in managing their financial resources due to limited financial knowledge and inadequate financial management practices. This study aims to analyze the impact of financial literacy on financial management practices among MSMEs in Subang. The research employs a quantitative approach using primary data collected through structured questionnaires distributed to MSME owners. The collected data were analyzed using descriptive statistics and regression analysis to examine the relationship between financial literacy and financial management practices. The results indicate that financial literacy has a positive and significant influence on financial management practices among MSME owners. MSME owners with higher financial literacy tend to implement better financial practices such as budgeting, record-keeping, and cash flow management. However, the study also finds that many MSME owners still have limited knowledge regarding advanced financial planning and financial risk management. Therefore, improving financial literacy through financial education programs and training is essential to strengthen financial management capabilities and support the sustainability of MSMEs. The findings of this study provide useful insights for policymakers and financial institutions in designing programs that promote financial literacy and support MSME development.