Abstract

The study aimed to assess the moderating effects of two key factors financial literacy and access to finance on the relationship between challenges faced by MSMEs and their business performance. To achieve this objective, a primary survey was conducted with 271 entrepreneurs from the Purba-Medinipur district of West Bengal. The collected data were analysed using regression analysis. The results indicated that financial literacy significantly moderates the relationship between MSME problems and business performance. Entrepreneurs with a higher level of financial literacy were better equipped to navigate business challenges, resulting in improved performance outcomes. Conversely, the study found that access to finance did not have a moderating effect on the relationship between MSME problems and business performance. This suggests that other elements such as managerial capabilities, prevailing market conditions, or institutional support may play a more critical role in addressing these challenges and enhancing business success. These findings underscore the importance of promoting financial literacy among entrepreneurs as a means to strengthen resilience and support sustainable business development.

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