Analysis of Financial Literacy and Financial Inclusion as a Strategy to Improve the Competitiveness of Small-Medium Enterprises (SMEs)
The handicraft industry is one of top selling industries in West Sumatera. The industry also brings considerable
contribution to the wealth of the community. In general, the main problem in the handcraft industry is on its capital and
marketing. The objective of this study is to find the level of financial literacy and financial inclusion of the handicraft
entrepreneurs, as well as to see the correlation between the level of financial literacy with the level of financial inclusion,
and to identify the factors that hinder the development of financial inclusion. This research used field observations,
interviews, and distribution of questionnaires as its primary data, and the secondary data were obtained from related
agencies. To answer the research question, we used descriptive analysis method and structural equation modeling. The
results show that the financial literacy has a positive and significant impact on the financial inclusion of the handicraft
entrepreneurs, the level of financial literacy of the sample is categorized as sufficiently literate, and the financial inclusion of
the handicraft entrepreneur is also categorized as sufficient. Therefore, it will be necessary to develop the financial inclusion
by overcoming the obstacles faced by SMEs, especially in accessing banking services and other formal financial institutions
in order to improve the competitiveness of SMEs.
Keywords - Financial Literacy, Financial Inclusion, handicraft SMEs.