Microenterprises’ Ability to Repay Debt. Do Saving Literacy and Knowledge Transfer Matter?

Abstract

The transfer of knowledge is critical for a company to expand and transform. Regarding a country's socioeconomic development, micro-enterprises are crucial for creating employment opportunities and reducing poverty. However, micro-enterprises ability to repay their debts is influenced by various factors, with saving literacy and knowledge transfer being essential components in enhancing their repayment capacity. To address the knowledge transfer gap, this study examined the factors affecting the ability of Malaysian micro-enterprises to repay their debts, including financial management, with data collected from 127 micro-enterprises in Klang Valley. The study utilized the PLS-SEM technique to analyze the data and test hypotheses to achieve research objectives, with the results showing that saving literacy and the role of knowledge transfer as a mediator positively impact micro-enterprises' ability to repay their debts. This article also provides recommendations for the growth of Malaysia's micro-enterprise sector and suggests the need for additional research in this area.