Integrating Financial Inclusion and Digital Payment to Enhance MSMEs Financial Performance

Abstract

This study investigates the effects of financial inclusion and digital payment adoption on the financial performance of Micro, Small, and Medium Enterprises (MSMEs) in Tasikmalaya, Indonesia. Grounded in the Resource-Based View (RBV) and Technology Acceptance Model (TAM), the study employs a quantitative explanatory design with primary data collected from 150 MSMEs. Hypotheses were tested using Partial Least Squares Structural Equation Modeling (PLS-SEM) via SmartPLS 4.0. Results confirm that financial inclusion (β = 0.381, p < 0.001) and digital payment adoption (β = 0.452, p < 0.001) both positively and significantly influence MSME financial performance, jointly explaining 64.1% of outcome variance (R² = 0.641). Digital payment demonstrated a stronger effect, underscoring the centrality of technological capability in MSME competitiveness. A complementary relationship between both constructs suggests that MSMEs integrating financial access with digital adoption achieve superior performance outcomes. These findings extend RBV and TAM to a regional emerging economy context and offer actionable guidance for policymakers, financial institutions, and fintech providers seeking to develop inclusive digital financial ecosystems in Indonesia.