Financial literacy and sustainability in SMEs: Do financial risk attitude, access to finance, and organizational risk-taking tolerance mediate?

Small and medium-sized enterprises (SMEs) contribute significantly to the economic growth of emerging economies. However, SMEs have difficulty maintaining their performance. This paper examines the impact of financial literacy on the sustainability of SMEs with the roles of access to finance, financial risk attitude, and organizational risk-taking tolerance as mediators. This study concentrated on the Indonesian market and used questionnaires to collect data from the owners or chief financial officers of SMEs. The extent of the correlations was examined using partial least squares structural equation modeling. It was found that financial literacy, financial risk attitude, and organizational risk-taking tolerance are significant antecedents of SME sustainability. Access to finance, on the other hand, was not a factor in SME sustainability. A financial risk mentality was also revealed to have a substantial influence on the association between financial literacy and SME viability in the study. Furthermore, the relationship between financial literacy and SME viability was found to be mediated by organizational risk-taking tolerance. This study has significant relevance for SMEs, as it confirms that financial literacy is crucial for continued success. SMEs with proper financial literacy will have a superior attitude to financial risk and organizational risk-taking tolerance, ensuring their sustainability. Future studies can investigate SME sustainability in other emerging economies and compare their performance and sustainability.