Financial literacy is an important factor in determining how well micro, small and medium enterprises (MSMEs) can withstand economic shocks, according to a review in the International Journal of Business Innovation and Research that has surveyed a decade’s worth of research in this area. The review essentially shows that stronger financial skills among business owners significantly improves the capacity of their company to adapt and survive during periods of disruption.
MSMEs account for the vast majority of businesses globally and employ a large proportion of the workforce. They can be vulnerable in times of crisis, such as a global economic downturn, a pandemic, or during periods of major international conflict. The review shows that this vulnerability is not an inherent charact…
Financial literacy is an important factor in determining how well micro, small and medium enterprises (MSMEs) can withstand economic shocks, according to a review in the International Journal of Business Innovation and Research that has surveyed a decade’s worth of research in this area. The review essentially shows that stronger financial skills among business owners significantly improves the capacity of their company to adapt and survive during periods of disruption.
MSMEs account for the vast majority of businesses globally and employ a large proportion of the workforce. They can be vulnerable in times of crisis, such as a global economic downturn, a pandemic, or during periods of major international conflict. The review shows that this vulnerability is not an inherent characteristic of MSMEs but depends to a large degree on the acumen of the owner.
Across the literature, the team identified various recurring themes. Entrepreneurs with good financial knowledge were able to manage cashflow more systematically. Those same business owners make more informed investment choices and approach credit markets with a clearer understanding of risks, repayment structures, and borrowing costs. In addition, prudent debt management, effective liquidity planning and strategic decision-making were important in building company resilience.
The researchers also point out that there is a growing convergence of financial literacy with digital literacy. As digital financial tools, so-called fintech, become embedded in business practice, the two forms of knowledge increasingly reinforce each other. Fintech is no longer a peripheral tool in MSME operations, but is central to how such small businesses function.
The review, however, also identified persistent gaps in the way research in this area is carried out. There are inconsistent definitions of resilience, fragmented international evidence, and limited inclusion of demographic variables such as gender, age and socio-economic status. These shortcomings, the researchers argue, might limit efforts to build evidence-based training programmes and financial policies that reflect the diverse conditions in which the world’s myriad MSMEs operate.
Esomar, M.J.F., Sumiati, S. Wijayanti, R. and Aisjah, S. (2025) ‘Digital financial literacy and resilience in MSMEs: a bibliometric systematic literature review’, Int. J. Business Innovation and Research, Vol. 38, No. 8, pp.1–30.