Analysis of the Effects of Financial Literacy and Social Safety Nets on the Activities of Small and Medium Enterprises (SMEs) in Surakarta City

Abstract

This study aims to analyze the effects of financial literacy and social safety nets on increasing household-level MSME activities, particularly among batik traders in Surakarta City who have received social safety net assistance and banking credit facilities. MSMEs play a crucial role in driving economic development, making government support through financial literacy programs and social protection initiatives essential for strengthening their sustainability. This study employs a quantitative approach using logit regression analysis to examine the relationship between MSME activity and several independent variables, including demographic factors (type of work and education level), social safety net index, financial literacy index, credit facilities, and total sales. The results indicate that education level and access to credit facilities have a positive and significant effect on increasing MSME activities at the household level. These findings suggest that improving educational capacity and expanding access to financial resources are important strategies for enhancing the growth and sustainability of MSMEs in Surakarta.