Building a Sustainable SME Financial Performance Model: Integrating Banking Access, Financial Literacy, Financial Management Capability, and Financial Resilience
Abstract
Small and Medium Enterprises (SMEs) often need to sustain financial performance while operating under constraints in access to finance, financial knowledge, and day-to-day financial management. This study develops an integrated model of Sustainable SME Financial Performance by examining Banking Access, Financial Literacy, and Financial Management Capability, with Financial Resilience as a mediating construct. A quantitative explanatory survey was conducted using primary questionnaire data from 300 SME owners or managers involved in financial decision-making, selected through purposive sampling. The instrument contained 25 indicators measured on a five-point Likert scale, and the data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS 4. The measurement model met the reported validity and reliability criteria: outer loadings ranged from 0.727 to 0.837, Cronbach's alpha from 0.837 to 0.860, composite reliability (rho_c) from 0.885 to 0.899, AVE from 0.607 to 0.641, and HTMT from 0.321 to 0.623. The structural model explained 27.4% of the variance in Financial Resilience and 38.7% of the variance in Sustainable SME Financial Performance. All seven direct paths were positive and statistically significant, and Financial Resilience showed the largest direct path to Sustainable SME Financial Performance (β = 0.338). The three specific indirect paths were also positive and significant, with coefficients of 0.059 for Banking Access, 0.094 for Financial Literacy, and 0.088 for Financial Management Capability. Because the corresponding direct and indirect paths were significant in the same direction, Financial Resilience functioned as a complementary partial mediator. Within the limits of a cross-sectional, self-reported design, the findings support an integrated view in which access to financial resources, financial understanding, and financial management capability are associated with stronger financial resilience and more sustainable SME financial performance.