Reframing SME Financial Performance: How Financial Capability Shapes the Effects of Financial Literacy and Mental Accounting

Financial capability likewise demonstrates a significant positive effect, highlighting the importance of practical financial skills and resource management competencies. However, its moderating role is found to be insignificant, indicating that financial capability does not strengthen the relationship between financial literacy, mental accounting, and financial performance. This study contributes to the growing body of research on MSME financial behavior aligned with the Resource-Based View (RBV).

The findings also reinforce the relevance of several Sustainable Development Goals (SDGs), particularly SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure), by emphasizing the need for stronger financial competencies to support sustainable MSME development. Overall, the results highlight the importance of enhancing financial knowledge, cultivating consistent financial behavior, and strengthening financial capability to improve decision-making and achieve more sustainable financial performance.