Impact of Digital Financial Literacy on Small and Medium-sized Enterprises (SMEs) Performance in Laos: The Mediating Role of Financial Self-Efficacy, Hierarchical Component Model Approach

Digital financial literacy has become a vital factor for the sustainability and performance of small and medium-sized enterprises (SMEs) in an increasingly digital economy. This study examines the impact of Digital Financial Literacy (DFL) on SME performance in Laos, with a particular focus on the mediating role of Financial Self-Efficacy (FSE). The main research question explores how digital and financial skills, combined with confidence in financial management, drive business outcomes. Data were collected through a survey of 151 SME owners in Laos and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with a hierarchical component model (HCM) approach. The results indicate that DFL significantly enhances SME performance, both directly and indirectly through increased FSE. These findings underscore the importance of integrated policies that promote both digital finance skills and financial self-efficacy among entrepreneurs to foster SME growth and success.