The Effect of BI Rate and Financial Literacy on the Performance of SMEs in Palu City
Nabila Aura^Lia1*, Uswatun Hasana2*, Pricylia Chintya Dewi Buntuang3*, Mashuri H. Tahili4*

Student of Public Administration Study Program, Faculty of Social and Political Sciences, Tadulako University

Abstract

The development of Micro, Small, and Medium Enterprises (SMEs) plays an important role in driving regional economic growth, including in the city of Palu. However, fluctuations in the Bank Indonesia benchmark interest rate (BI Rate) and low levels of financial literacy often affect the stability and performance of SMEs. Furthermore, the purpose of this article is to provide an empirical overview of the extent to which the BI Rate and financial literacy contribute to the improvement or decline in SMEs performance in the Palu City area. The research method used is a quantitative approach with a survey technique through the distribution of questionnaires to 70 SMEs respondents in Palu City. The data obtained was then analyzed using multiple linear regression to determine the relationship and influence between the independent variables BI Rate (X1) and financial literacy (X2) and the dependent variable SMEs performance (Y). The results of the study show that the BI Rate has a negative effect on SMEs performance, while financial literacy has a positive and significant effect. This means that when interest rates increase, SMEs performance tends to decline, while an increase in financial literacy can strengthen SMEs^ ability to manage their finances and improve their performance.

Keywords: BI Rate, financial literacy, SMEs performance, SMEs actorsst Try to Submit This Sample Abstract

Topic: Financial Management and Banking