Oil Palm Smallholders Entrepreneurs And Financial Literacy: Technology Adoption
DOI:
https://doi.org/10.37385/jaets.v6i1.6168Keywords:
financial literacy, smallholder entrepreneurs, business performance, technology adoption, oil palm industryAbstract
This study explores the relationship between financial literacy and business performance among oil palm smallholder entrepreneurs in Malaysia, emphasizing the role of technology in improving financial practices. Many smallholders earn less than RM2000 per month, largely due to low financial literacy, which hinders effective financial management and business sustainability. Financial literacy is crucial for accessing financing and making informed financial decisions. Data were collected from 1,500 smallholders across six territories in Malaysia, with a 14.4% response rate. Structural Equation Modeling (SEM) revealed a positive correlation between financial literacy and improved financial practices, leading to better business outcomes, including enhanced access to bank loans and government grants. The study also highlights the transformative potential of digital technologies, such as mobile banking and financial education apps, in bridging financial literacy gaps. The findings suggest that targeted financial literacy programs and the adoption of digital tools can significantly enhance smallholders' financial management and business performance. This has important implications for policymakers and financial institutions in promoting rural economic development and sustainable entrepreneurship within the agricultural sector.
Downloads
References
Adegbite, O. O., Machethe, C. L., & Anderson, C. L. (2021). Revisiting the measurement of financial inclusion of rural smallholder farmers in Nigeria. Agricultural Finance Review, 81(4), 554–567. https://doi.org/10.1108/afr-07-2020-0099
Amfo, B., & Ali, E. B. (2020). Climate change coping and adaptation strategies: How do cocoa farmers in Ghana diversify farm income? Forest Policy and Economics, 119, 102265. https://doi.org/10.1016/j.forpol.2020.102265
Anshika, A., & Singla, A. (2022). Financial Literacy of Entrepreneurs: A systematic review. Managerial Finance, 48(9/10), 1352–1371. https://doi.org/10.1108/mf-06-2021-0260
Avdeenko, A., Bohne, A., & Frölich, M. (2019). Linking savings behavior, confidence and individual feedback: A field experiment in Ethiopia. Journal of Economic Behavior & Organization, 167, 122–151. https://doi.org/10.1016/j.jebo.2019.09.024
Batista, C., & Vicente, P. C. (2020). Improving access to savings through mobile money: Experimental evidence from African smallholder farmers. World Development, 129, 104905. https://doi.org/10.1016/j.worlddev.2020.104905
Benedict, I. O., Wilson, E., Ugwu, C. N., & Ibe, C. B. (2024). Investing in Rural Agriculture in the Face of Innovative Financial Services: Does Financial Literacy Matter in Nigeria? SAGE Open, 14(2). https://doi.org/10.1177/21582440241244685
Carlin, B., Olafsson, A., & Pagel, M. (2022). Mobile Apps and Financial Decision Making. Review of Finance, 27(3), 977–996. https://doi.org/10.1093/rof/rfac040
Choudhury, A., Jones, J., & Opare-Addo, M. (2020). Perceived Risk and Willingness to Provide Loan to Smallholder Farmers in Ghana. Journal of African Business, 23(1), 23–40. https://doi.org/10.1080/15228916.2020.1773732
Cruz, N. a. D., Villanueva, A. C. B., Tolin, L. A., Disse, S., Lensink, R., & White, H. (2023). PROTOCOL: Effects of interventions to improve access to financial services for micro?, small? and medium?sized enterprises in low? and middle?income countries: An evidence and gap map. Campbell Systematic Reviews, 19(3). https://doi.org/10.1002/cl2.1341
Dalal, A., & Habib, A. (2023). Supporting SMEs Financial Resilience during Crises: A Framework to Evaluate the Effectiveness of Financial Literacy Programs Targeting SMEs. Malaysian Journal of Economic Studies, 60(1), 105–121. https://doi.org/10.22452/mjes.vol60no1.6
Derbyshire, L. E., Fouché, J. P., & McChlery, S. (2023). Exploring financial literacy education strategies based on small- and micro-enterprise business practices. South African Journal of Business Management, 54(1). https://doi.org/10.4102/sajbm.v54i1.3903
Fornell, C., & Larcker, D. F. (1981). Evaluating Structural Equation Models with Unobservable Variables and Measurement Error. Journal of Marketing Research, 18(1), 39. https://doi.org/10.2307/3151312
Frimpong, S. E., Agyapong, G., & Agyapong, D. (2022). Financial literacy, access to digital finance and performance of SMEs: Evidence From Central region of Ghana. Cogent Economics & Finance, 10(1). https://doi.org/10.1080/23322039.2022.2121356
Gikonyo, N. W., Busienei, J. R., Gathiaka, J. K., & Karuku, G. N. (2022). Analysis of Household Savings and adoption of climate smart agricultural technologies. evidence from Smallholder Farmers in Nyando Basin, Kenya. Heliyon, 8(6). https://doi.org/10.1016/j.heliyon.2022.e09692
Hainzer, K., Gard, C., O’Mullan, C., & Brown, P. H. (2023). A design approach for financial literacy curriculum targeting smallholders in Papua New Guinea. International Journal of Lifelong Education, 42(3), 231–248. https://doi.org/10.1080/02601370.2023.2213845
Hair Jr., J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2016). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). Thousand Oaks, CA: Sage Publications.
Hasan, M., Le, T., & Hoque, A. (2021). How does financial literacy impact on inclusive finance? Financial Innovation, 7(1). https://doi.org/10.1186/s40854-021-00259-9
Kakinuma, Y. (2022). Financial literacy and quality of life: a moderated mediation approach of fintech adoption and leisure. International Journal of Social Economics, 49(12), 1713–1726. https://doi.org/10.1108/ijse-10-2021-0633
Kline, R.B. (2016). Methodology in the social sciences: Principles and Practice of Structural Equation Modeling. 4th ed., New York: The Guilford Press.
Kwaramba, M. F., Sridharan, S., & Mavondo, F. T. (2022). Drivers and outcomes of smallholder market participation in Sub-Saharan Africa. Journal of the Academy of Marketing Science, 51(5), 1165–1183. https://doi.org/10.1007/s11747-022-00914-2
Lagna, A., & Ravishankar, M. N. (2022). Making the world a better place with fintech research. Information Systems Journal, 32(1), 61–102. https://doi.org/10.1111/isj.12333
Lusardi, A., & Messy, F. (2023). The importance of financial literacy and its impact on financial wellbeing. Journal of Financial Literacy and Wellbeing, 1(1), 1–11. https://doi.org/10.1017/flw.2023.8
Mamuye, W. (2021). Determinants of Smallholder Farmers Participation in Formal Credit and Challenges Faced by Institutions: The Case of Mojana Wodera District, Amhara Region, Ethiopia. International Journal of Finance and Banking Research, 7(1), 9. https://doi.org/10.11648/j.ijfbr.20210701.12
Masinde, J. W. (2019). Informal Financing and the Use of Formal Financial Services among Small Holder Farmers in Kenya. Management and Economics Research Journal, 5, 1. https://doi.org/10.18639/merj.2019.873220
Midamba, D. C., Jjengo, A., & Ouko, K. O. (2024). Assessing the determinants of saving behaviour: evidence from rural farming households in Central Uganda. Discover Sustainability, 5(1). https://doi.org/10.1007/s43621-024-00305-3
More, A., & Aslekar, A. (2022). Role of ICT & Fintech in Indian Agriculture. 2022 International Conference on Decision Aid Sciences and Applications (DASA). https://doi.org/10.1109/dasa54658.2022.9765170
Mpofu, O., & Sibindi, A. B. (2022). Informal Finance: A Boon or Bane for African SMEs? Journal of Risk and Financial Management, 15(6), 270. https://doi.org/10.3390/jrfm15060270
Mutsonziwa, K., & Fanta, A. B. (2020). Small Business Performance: Is It Access to Formal or Informal Credit that Matters? Journal of African Business, 22(4), 550–563. https://doi.org/10.1080/15228916.2020.1826854
Ntakyo, R. P., Johnny, M., Robert, B., Diana, N., & Robert, K. (2021). Influence of informal financial literacy training on financial knowledge and behavior of rural farmers: Evidence from Uganda. Journal of Development and Agricultural Economics, 13(3), 192–204. https://doi.org/10.5897/jdae2021.1290
Owusu, J., Ismail, M. B., Osman, M. H. B. M., & Kuan, G. (2019). Financial literacy as a moderator linking financial resource availability and SME growth in Ghana. Innovations, 16(1), 154-166.
Qonita, T., & Wandebori, H. (2023). Proposed Customer Acquisition Strategy for Mobile Banking Application. International Journal of Current Science Research and Review, 06(07). https://doi.org/10.47191/ijcsrr/v6-i7-68
Rauf, U. A. A., Asha’ari, M. J., Jamil, A. H., Deli, M. M. & Abdullah, S. I. N. W. (2023). Unraveling Technology Components on the Financial Performance of Malaysian Public Higher Education: CB-SEM Approach. Tuijin Jishu /Journal of Propulsion Technology, 44(4), 6383-6398. https://doi.org/10.52783/tjjpt.v44.i4.2202
Rauf, U. A. A., Jabar, J., Mansor, J. & Sharif, S. M. (2019). The Association between Intranet Quality and Organizational Performance. International Journal of Advanced Science and Technology, 28(1), 576-583. http://sersc.org/journals/index.php/IJAST/article/view/417
Raza, A., Tong, G., Sikandar, F., Erokhin, V., & Tong, Z. (2023). Financial Literacy and Credit Accessibility of Rice Farmers in Pakistan: Analysis for Central Punjab and Khyber Pakhtunkhwa Regions. Sustainability, 15(4), 2963. https://doi.org/10.3390/su15042963
Sarfo, Y., Musshoff, O., & Weber, R. (2023). Farmers’ awareness of digital credit: Does financial literacy matter? Journal of International Development, 35(8), 2299–2317. https://doi.org/10.1002/jid.3774
Sayinzoga, A., Bulte, E. H., & Lensink, R. (2016). Financial Literacy and Financial Behaviour: Experimental Evidence from Rural Rwanda. The Economic Journal, 126(594), 1571–1599. https://doi.org/10.1111/ecoj.12217
Silitonga, R. M., Jou, Y., Sukwadi, R., & Pratama, F. A. (2023). FINANCIAL LITERACY TECHNOLOGY ADOPTION IN INDONESIAN SHARIA BANKING: A PRELIMINARY ANALYSIS. International Journal of Application on Economics and Business, 1(3), 911–920. https://doi.org/10.24912/ijaeb.v1i3.911-920
Soekarni, M., Adam, L., Thoha, M., Sarana, J., Ermawati, T., Saptia, Y., Adityawati, S., Sujianto, N., & Wibowo, M. (2024). Strengthening financial literacy of smallholder farmers through agricultural fintech peer-to-peer lending: evidence and practical implications. Cogent Social Sciences, 10(1). https://doi.org/10.1080/23311886.2024.2359011
Su, L., Peng, Y., Kong, R., & Chen, Q. (2021). Impact of E-Commerce Adoption on Farmers’ Participation in the Digital Financial Market: Evidence from Rural China. Journal of Theoretical and Applied Electronic Commerce Research, 16(5), 1434–1457. https://doi.org/10.3390/jtaer16050081
Ullah, A., Verner, V., Madaki, M. Y., Adams, F., & Bavorova, M. (2024). Factors Influencing Informal Credit Access and Utilization among Smallholder Farmers: Insights from Mountainous Regions of Pakistan. Agriculture, 14(10), 1764. https://doi.org/10.3390/agriculture14101764
Wang, X., & He, G. (2020). Digital Financial Inclusion and Farmers’ Vulnerability to Poverty: Evidence from Rural China. Sustainability, 12(4), 1668. https://doi.org/10.3390/su12041668
Widyastuti, M., Ferdinand, D. Y. Y., & Hermanto, Y. B. (2023). Strengthening Formal Credit Access and Performance through Financial Literacy and Credit Terms in Micro, Small and Medium Businesses. Journal of Risk and Financial Management, 16(1), 52. https://doi.org/10.3390/jrfm16010052
Xu, N., Shi, J., Rong, Z., & Yuan, Y. (2020). Financial literacy and formal credit accessibility: Evidence from informal businesses in China. Finance Research Letters, 36, 101327. https://doi.org/10.1016/j.frl.2019.101327
Xu, S., Yang, Z., Ali, S. T., Li, Y., & Cui, J. (2022). Does Financial Literacy Affect Household Financial Behavior? The Role of Limited Attention. Frontiers in Psychology, 13. https://doi.org/10.3389/fpsyg.2022.906153
Yuwono, W., Susanna, N., Ramadhani, D. S., Sasmita, E. W., & Sihotang, W. H. (2023). Analysis of the Influence of the Role of Financial Literacy on Personal Financial Management. European Journal of Business Management and Research, 8(3), 57–61. https://doi.org/10.24018/ejbmr.2023.8.3.1891
Zaimovic, A., Torlakovic, A., Arnaut-Berilo, A., Zaimovic, T., Dedovic, L., & Meskovic, M. N. (2023). Mapping Financial Literacy: A Systematic Literature Review of Determinants and Recent Trends. Sustainability, 15(12), 9358. https://doi.org/10.3390/su15129358
Zhllima, E., Shahu, E., Skreli, E., & Imami, D. (2024). Factors associated with smallholder farmers’ financial illiteracy in the context of an emerging economy. Studies in Agricultural Economics, 126(1), 11–17. https://doi.org/10.7896/j.2703
CITEDNESS IN SCOPUS
CITEDNESS IN WOS
