Financial inclusion and financial literacy: the role of digitalization and financial health in SME innovation

This study examines how financial literacy and financial inclusion shape the financial health, digital maturity and innovative capacity of micro, small and medium-sized enterprises (SMEs) in Ecuador. Data were collected from 175 SME owners and managers, selected through simple random sampling from the Ecuadorian Business Statistical Registry and representing a broad range of economic sectors. Partial least squares structural equation modeling (PLS-SEM) was employed to analyze the structural relationships among these constructs. The findings indicate that financial education significantly enhances financial inclusion, which emerges as the strongest predictor of SMEs’ financial health. However, financial health does not directly foster innovation; instead, its effect is fully mediated by digital maturity, which acts as a key enabler of innovative activity. These results highlight the pivotal role of financial inclusion in translating improved financial conditions into technological readiness and innovation, particularly in contexts dominated by microenterprises. The study provides practical insights for policymakers aiming to promote sustainable competitiveness among SMEs through integrated strategies that align financial capacity, digital transformation and innovation.