Turning Pressure into Prudence: How PPATK Policy and Institutional Trust Shape MSME Financial Behavior Through Financial Literacy

Authors

  • Faizal Rizky Yuttama Faizal Universitas Harapan Bangsa
  • Budi Widadi Budi Universitas Harapan Bangsa

DOI:

https://doi.org/10.21111/at.v11i2.15614

Keywords:

financial literacy, PPATK policy, trust, financial behavior, MSMEs

Abstract

MSMEs play a critical role in economic development but often struggle with financial vulnerability and limited integration into formal financial systems. Regulatory policies such as account blocking by PPATK and low institutional trust can further hinder MSMEs, especially when financial literacy is inadequate. This study aims to analyze the impact of PPATK’s account blocking policy and trust in financial institutions on MSME financial behavior, with financial literacy as a mediating variable. A quantitative, causal-comparative research design was employed using a sample of 200 MSMEs in Banyumas Regency selected through purposive sampling. Data were collected via a structured Likert-scale questionnaire and analyzed using Structural Equation Modeling with Partial Least Squares (SEM-PLS). Reliability and validity were assessed through composite reliability, AVE, and loading factors; mediation and direct effects were tested using bootstrapping with 5,000 subsamples. The findings revealed that both PPATK policy and institutional trust significantly influence MSME financial behavior. Financial literacy demonstrated a strong direct effect on financial behavior and served as a significant mediator for both institutional variables. MSMEs with higher trust and stronger literacy were more likely to engage in transparent and strategic financial practices. Regulatory pressure, when filtered through financial literacy, shifted from being a constraint to a catalyst for responsible financial behavior. This study highlights the dual importance of institutional trust and financial education in shaping MSME responses to financial regulation. Integrated strategies that combine enforcement with literacy programs can enhance financial resilience and inclusion for MSMEs in emerging economies.

References

Ahmad, S., Lensink, R., & Mueller, A. (2023). Religion, social desirability bias and financial inclusion: Evidence from a list experiment on Islamic (micro-)finance. Journal of Behavioral and Experimental Finance, 38. https://doi.org/10.1016/j.jbef.2023.100795

Aidi, Z., Prawira, M. Y., & Fitriadi, M. (2023). Indonesia Legal Policy for Micro, Small, and Medium Enterprises Post-COVID-19 Pandemic Economic Recovery. Review of Economics and Finance, 21, 2611–2617. https://doi.org/10.55365/1923.x2023.21.279

Ajzen, I. (2012). The theory of planned behavior. Handbook of Theories of Social Psychology: Volume 1, 50(2), 438–459. https://doi.org/10.4135/9781446249215.n22

Andreou, P. C., & Anyfantaki, S. (2021). Financial literacy and its influence on internet banking behavior. European Management Journal, 39(5), 658–674. https://doi.org/10.1016/j.emj.2020.12.001

Bilici, M. R., & Çevik, S. (2023). Financial literacy and cash holdings in Türkiye. Central Bank Review, 23(4). https://doi.org/10.1016/j.cbrev.2023.100129

Callis, Z., Gerrans, P., Walker, D. L., & Gignac, G. E. (2023). The association between intelligence and financial literacy: A conceptual and meta-analytic review. Intelligence, 100. https://doi.org/10.1016/j.intell.2023.101781

Cascavilla, A. (2024). Between money and speculative asset: The role of financial literacy on the perception towards Bitcoin in Italy. Journal of Economic Psychology, 102. https://doi.org/10.1016/j.joep.2024.102716

Chang, C., Lu, C., & Lai, P. (2021). Examining the Drivers of Competitive Advantage of the International Logistics Industry. International Journal of Logistics Research and Applications, 25(12), 1523–1541. https://doi.org/10.1080/13675567.2021.1915263

Chin, W. W., & Newsted, P. R. (1998). The partial least squares approach to structural equation modeling. Modern methods for business research. In Statistical Strategies for Small Sample Research. Lawrence Erlbaum Associates. http://books.google.com.sg/books?hl=en&lr=&id=EDZ5AgAAQBAJ&oi=fnd&pg=PA295&dq=chin+1998+PLS&ots=47qB7ro0np&sig=rihQBibvT6S-Lsj1H9txe9dX6Zk#v=onepage&q&f=false

Cucinelli, D., & Soana, M. G. (2023). Investor preferences, financial literacy and intermediary choice towards sustainability. Research in International Business and Finance, 66. https://doi.org/10.1016/j.ribaf.2023.102027

Dash, A., & Mohanta, G. (2024). Fostering financial inclusion for attaining sustainable goals: What contributes more to the inclusive financial behaviour of rural households in India? Journal of Cleaner Production, 449(February), 141731. https://doi.org/10.1016/j.jclepro.2024.141731

Delemere, E., & Liston, P. M. (2024). Reducing e-waste in Europe: Examining the impact of environmental and financial literacy on the premature replacement of appliances across owner …. Energy Reports, 5910–5921. https://www.sciencedirect.com/science/article/pii/S2352484724003172

Frisancho, V. (2023). Spillover effects of financial education: The impact of school-based programs on parents. Journal of Financial Literacy and Wellbeing, 1(1), 138–153. https://doi.org/10.1017/flw.2023.2

Ghozali, I. (2014). Structural Equation Modeling Metode Alternatif Dengan Partial Least Squares (PLS). Universitas Diponegoro Semarang. In Structural Equation Modeling Metode Alternatif Dengan Partial Least Squares (PLS). Universitas Diponegoro Semarang. Badan Penerbit Universitas Diponegoro.

Grohmann, A. (2018). Financial literacy and financial behavior: Evidence from the emerging Asian middle class. Pacific Basin Finance Journal, 48(July 2017), 129–143. https://doi.org/10.1016/j.pacfin.2018.01.007

Hair et al. (2019). A primer on partial least squares structural equation modeling (PLS-SEM) (2nd ed.). Sage Publications.

Liu, L., & Zhang, H. (2021). Financial literacy, self-efficacy and risky credit behavior among college students: Evidence from online consumer credit. Journal of Behavioral and Experimental Finance, 32, 100569. https://doi.org/10.1016/j.jbef.2021.100569

Lu, Z., Li, H., & Wu, J. (2024). Exploring the impact of financial literacy on predicting credit default among farmers: An analysis using a hybrid machine learning model. Borsa Istanbul Review, 24(2), 352–362. https://doi.org/10.1016/j.bir.2024.01.006

Mazzoli, C., Ferretti, R., & Filotto, U. (2024). Financial literacy and financial advice seeking: Does product specificity matter? Quarterly Review of Economics and Finance, 95, 98–110. https://doi.org/10.1016/j.qref.2024.03.012

Morgan, P. J., & Long, T. Q. (2020). Financial literacy, financial inclusion, and savings behavior in Laos. Journal of Asian Economics, 68, 101197. https://doi.org/10.1016/j.asieco.2020.101197

Niţoi, M., & Pochea, M. M. (2024). Trust in the central bank, financial literacy, and personal beliefs. Journal of International Money and Finance, 143. https://doi.org/10.1016/j.jimonfin.2024.103066

PPATK. (2024). PPATK Annual Report for 2023. https://www.ppatk.go.id/publikasi/read/225/ppatk-annual-report-for-2023.html

Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40(3), 879–891. https://doi.org/10.3758/BRM.40.3.879

Rey-Ares, L., Fernández-López, S., Castro-González, S., & Rodeiro-Pazos, D. (2021). Does self-control constitute a driver of millennials’ financial behaviors and attitudes? Journal of Behavioral and Experimental Economics , 93. https://doi.org/10.1016/j.socec.2021.101702

Sekaran U, B. R. (2019). Research Methods for Business: A Skill-Building Approach. Wiley.

Strömbäck, C., Skagerlund, K., Västfjäll, D., & Tinghög, G. (2020). Subjective self-control but not objective measures of executive functions predicts financial behavior and well-being. Journal of Behavioral and Experimental Finance, 27, 100339. https://doi.org/10.1016/j.jbef.2020.100339

Ventre, V., Martino, R., & Muñoz Torrecillas, M. J. (2024). Relationship between an inconsistent degree of financial literacy and inconsistent decision-making in intertemporal choices. Heliyon, 10(5). https://doi.org/10.1016/j.heliyon.2024.e27253

Widjayanti, C. E., Adawiyah, W. R., & Sudarto. (2025). Financial literacy innovation is mediated by financial attitudes and lifestyles on financial behavior in MSME players. Journal of Innovation and Entrepreneurship, 14(1). https://doi.org/10.1186/s13731-025-00525-5

Downloads

Published

2025-12-30

How to Cite

Faizal, F. R. Y., & Budi, B. W. (2025). Turning Pressure into Prudence: How PPATK Policy and Institutional Trust Shape MSME Financial Behavior Through Financial Literacy. Al Tijarah, 11(2), 328–337. https://doi.org/10.21111/at.v11i2.15614

Issue

Vol. 11 No. 2 (2025): Al Tijarah l December

Section

Articles

License

The Authors submitting a manuscript do so on the understanding that if accepted for publication, copyright of the article shall be assigned to Al Tijarah journal and Departement of Management, Faculty of Economics and Management, University of Darussalam as publisher of the journal.