Enhancing the Financial Performance of Farm Enterprises: Does Access to Finance Mediate Financial Literacy?

Abstract

This study analyzes the effect of financial literacy on access to finance and the financial performance of farm enterprises, as well as the mediating role of access to finance. The study was conducted on members of the Women Farmer Group in Kanigaran District, Probolinggo City, using a quantitative survey approach. From a population of 175 members, 121 respondents were selected through proportional random sampling. Data were collected using questionnaires and analyzed with PLS-SEM using SmartPLS. The results show that financial literacy positively and significantly affects access to finance and farm financial performance. Access to finance also positively affects farm financial performance and mediates the relationship between financial literacy and farm financial performance. These findings indicate that financial literacy and accessible financing schemes are important for improving income, profit, capital management, and business sustainability in women-led farm enterprises.