Digital Financial Literacy, Financial Inclusion, and SME Performance in Malaysia: Evidence from Threshold Regression
Literasi Kewangan Digital, Keterangkuman Kewangan, dan Prestasi PKS di Malaysia: Bukti Regresi Ambang

Faculty of Business and Management
Universiti Teknologi MARA Cawangan Pahang
Kampus Jengka, MALAYSIA.

rosmahnizam@uitm.edu.my

Faculty of Business & Communication
Universiti Malaysia Perlis
Kampus UniCITI Alam, Padang Besar, MALAYSIA.

noorazeela@unimap.edu.my

Faculty of Economics and Management
Universiti Kebangsaan Malaysia
43600 UKM, Bangi Selangor, MALAYSIA.

zak1972@ukm.edu.my

Abstract

This study examines the effect of digital financial literacy on firm performance among selected small and medium-sized enterprises (SMEs) in Malaysia. The level of digital financial literacy is measured as a percentage, based on firm’s understanding or knowledge, experience, awareness of potential risks, and skills. The level of financial inclusion for each firm, as the threshold variable, is calculated using a newly constructed firm-level  financial inclusion index. The relationship between digital financial literacy and firm performance is subsequently estimated using a cross-sectional threshold regression technique. The main findings reveal the digital financial literacy-performance nexus is contingent on the level of financial inclusion, indicating that digital financial literacy exhibits a non-monotonic positive effect on firm performance. The positive effect is evident at high and low levels of financial inclusion. These  findings should motivate policymakers in Malaysia to exert greater efforts to raise awareness of digital financial literacy as a means of supporting sustainable firm performance. The utilization of digital financial services plays a crucial role in mitigating information asymmetry and facilitating SMEs’ access to finance, thereby enhancing firm performance.

Keywords

Digital financial literacy; Financial inclusion; firm performance; SMEs; threshold regression
https://doi.org/10.17576/pengurusan-2025-75-5

Citation

Nizam, R., Zainol Abidin, N., & Abdul Karim, Z. (2025). Digital Financial Literacy, Financial Inclusion, and SME Performance in Malaysia: Evidence from Threshold Regression. Jurnal Pengurusan, 75, –. https://doi.org/10.17576/pengurusan-2025-75-5

@article{nizam2025digital,
  title={Digital Financial Literacy, Financial Inclusion, and SME Performance in Malaysia: Evidence from Threshold Regression},
  author={Nizam, Rosmah and Zainol Abidin, Noorazeela and Abdul Karim, Zulkefly},
  journal={Jurnal Pengurusan},
 

volume={75},
  number={},
  pages={—},
  year={2025},
  doi={https://doi.org/10.17576/pengurusan-2025-75-5},
  publisher={Penerbit UKM},
}

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Article received: April 30, 2025 
Accepted for publication: November 2, 2025 
Available online: November 17, 2025

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75 (2025) –

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