Financial inclusion as mediator in the relationship of social capital and financial literacy towards business performance of the trade sector SMEs in Pekanbaru, Indonesia

This study analyzes SMEs' performance problems in the trade sector in Pekanbaru by using several internal company factors to build a competitive strategy till the year 2021. The variables used in this study consisted of social capital, financial literacy, financial inclusion, and business performance. The study used 300 SMEs consisting of 26 wholesalers and 274 retailers in Pekanbaru, Riau. We used a structural equation model (SEM) approach with AMOS for hypothesis testing. The results show that social capital and financial literacy have a significant direct effect on the SME businesses' performance in the trade sector in Pekanbaru. This shows that social capital and financial literacy are two determining factors for the success of SME businesses. However, social capital does not affect business performance indirectly through the role of financial inclusion.