Beyond Financial Knowledge: Financial Literacy, Banking Attitude, and Credit Intention among Indonesian MSMEs

Abstract

This study examined the effect of financial literacy on intention to use credit through attitude to adopt conventional banking services among micro, small, and medium enterprises (MSMEs) in Indonesia. The study was motivated by the persistent gap between formal credit availability and the willingness of MSME actors to use bank credit. A quantitative explanatory design was applied through a structured survey of 308 respondents and analyzed using Partial Least Squares Structural Equation Modeling. The measurement model showed adequate convergent validity and internal consistency, while the structural model indicated that financial literacy significantly improved attitudes toward conventional banking services. Attitude significantly increased credit-use intention and mediated the relationship between financial literacy and credit intention. The direct effect of financial literacy on credit-use intention was not statistically significant at the five percent level, indicating that knowledge alone is insufficient unless translated into a positive evaluation of banking services. The findings strengthen the behavioral-finance argument that cognitive capability must operate through psychological acceptance before MSMEs develop formal borrowing intention