Does Debt Management Literacy Affect Loan Repayment Of SMES?

Abstract

Several studies highlight the gap between perception and reality in financial literacy. Indicating that while individuals believe they have a good understanding of finance, the reality can be different. This emphasises the importance of objectively evaluating and improving financial literacy. This study aims to determine the level of debt management literacy, as well as its effect on loan repayment of 254 SMEs in Indonesia, the findings suggest that improving Debt Management Literacy (DML) can positively impact Financial Inclusion (FI) and Loan Repayment (LR), can reduce default rates, improve credit scores, financial stability, better financing options, risk mitigation, and effective long-term financial planning. These benefits can contribute to the overall financial health and success of Micro and Small Enterprises.