Determinants of MSME financial report quality: the role of financial technology, financial literacy, and internal control systems

Abstract

Purpose – This study aims to examine the influence of financial technology (FinTech), financial literacy, and internal control systems on the quality of financial reports among Micro, Small, and Medium Enterprises (MSMEs).

Design/methodology/approach – A quantitative, descriptive method was employed. Primary data were collected through questionnaires distributed to 100 MSME actors registered as active members of the Jakprenuer program in East Jakarta. The sampling technique used was non-probability sampling. Data were analyzed using descriptive statistics via SPSS.

Findings – The results indicate that financial literacy and internal control systems have a positive and significant impact on the quality of MSME financial reports. However, financial technology does not significantly affect financial reporting quality. This non-significant finding is attributed to MSME actors' persistent difficulties in adapting to the digital economy, their reluctance to transition from direct sales to online platforms, and concerns regarding inadequate knowledge and skills in utilizing FinTech applications.

Originality/value – This study contributes to the limited empirical literature on the interplay between FinTech adoption, financial literacy, internal controls, and financial reporting quality in the MSME context, particularly within an emerging economy setting.