Beyond access: Financing decisions and digital literacy shaping MSME capital structure

Digital financial transformation has expanded financing opportunities for micro, small, and medium enterprises (MSMEs). However, the relationship between digital financing access and firms' capital-structure management may depend on financing decisions and digital financial literacy. This study examines the direct and indirect associations between digital financing access and perceived MSME capital-structure management, with financing decisions as a mediating variable and digital financial literacy capability as a moderating variable, among MSMEs in Banjar City and Ciamis Regency, Indonesia. Using an explanatory quantitative approach and a cross-sectional survey of 212 purposively selected MSME owners/managers, data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS 3, complemented by Importance-Performance Map Analysis (IPMA). The results indicate that digital financing access is positively and significantly associated with financing decisions (β = 0.739; p < 0.001) and perceived MSME capital-structure management (β = 0.508; p < 0.001), with a significant indirect effect through financing decisions (β = 0.332; VAF = 39.5%; p < 0.001). Digital financial literacy capability positively moderates the relationship between digital financing access and perceived capital-structure management (β = 0.236; p < 0.001). The model explains 87.0% of the variance in the measured MSME capital-structure construct, while IPMA identifies digital financing access as the predictor with the highest importance score. These findings contribute to an integrated understanding of digital financing access, financing decisions, and digital financial literacy in MSMEs' funding-source management, offering practical insights for MSMEs, financial institutions, and local governments.