The Role of Financial Behavior as a Mediator of the Influence of Financial Literacy and Financial Attitudes on MSMEs Investment Decisions in Indonesia

Micro, small and medium enterprises (MSMEs) are pillars of the economy and make a large contribution to gross domestic product (GDP). However, MSMEs' access to funding is relatively limited because they are not considered bankable and have a high risk. The purpose of this study is to analyze the impact of financial literacy and financial attitudes on investment decisions in mediating financial behavior. The target audience for the study comprises small and medium enterprises in Malang City, East Java, Indonesia, with a sample size of 100 people, and structural equation modeling (SEM) was employed as an analytical tool. The conclusion argues that financial literacy and attitude have an impact on investment decisions. Financial conduct can moderate the impact of financial literacy on investment decisions, but it cannot moderate the impact of financial attitudes toward investment decisions. The findings of this study show that investment decisions involve the competence and confidence of MSME owners to employ financial knowledge or financial literacy and the ability to manage future finances. MSME owners' ability to handle resources for investment adds to financial behavior, as seen by their ability to develop budget plans. Financial behavior is unable to mitigate the impact of financial attitudes on investment decisions, implying that future financial management attitudes will make it impossible for MSMEs to estimate operational costs. This situation makes it harder for MSME owners to operate as outlined in their budget plans.