THE EFFECT OF CAPITAL, INNOVATION AND LEVEL OF FINANCIAL LITERACY UNDERSTANDING ON THE PERFORMANCE OF MICRO, SMALL AND MEDIUM ENTERPRISES IN THE CISOKA MARKET, TANGERANG BANTEN

Abstract

This study aims to determine the effect of Innovation Capital and Financial Literacy on the performance of Micro, Small, and Medium Enterprises in the Cisoka Market. This research model uses a descriptive quantitative research method. In this study, there are four variables: capital (X1), innovation (X2), and financial literacy (X3) as independent variables, and MSME performance (Y) as the dependent variable. The object of this study is MSMEs in the Cisoka Market. With validity test, reliability test, normality test, multicollinearity test, correlation test, heteroscedasticity test, coefficient of determination, multiple linear regression analysis, t test, and f test. The results of the study show that the t test results of the capital variable (X1) on the performance of MSMEs (Y) obtained t count 2.686> t table 1.997 and a significance value of 0.009<0.05, the t test results of the innovation variable (X2) obtained t count 4.646> t table 1.997 with a significance value of 0.000 <0.05, and the t test results of the financial literacy understanding level variable (X₃) on the performance of MSMEs (Y) obtained t count 1.130 <t table 1997 and a significance value of 0.262> 0.05. Based on the results of the simultaneous F-test, the calculated F was 57.226 > Ftable 2.744, with a significance value of 0.000 < 0.05. The coefficient of determination (R²) analysis yielded a result of 0.722 (72.2%). It can be concluded that partially, capital (X1) and innovation (X2) have a positive effect, while the level of financial literacy understanding (X3) is not statistically proven to have an effect on MSME performance (Y). Meanwhile, simultaneously, capital (X1), innovation (X2), and the level of financial literacy understanding (X3) have a significant effect on MSME performance (Y).