Uncovering the Impact of Financial Anxiety on Emotional Exhaustion and Financial Performance of MSMEs and the Role of Islamic Financial Literacy: Implementation of the Third Sustainable Development Goal of the United Nations

Management Department / Faculty of Economics and Business, Jenderal Soedirman University, Purwokerto, Central Java, Indonesia, 53121

^* Corresponding author: devani20092010@gmail.com

Abstract

This study examines the impact of financial anxiety on emotional Exhaustion and financial performance of SMEs in Central Java. This study also test Islamic financial literacy as moderating variable. This research supports the third sustainable development goal of the United Nations: good health and wellbeing. A cross-sectional survey method was used with a sample of 375 SME owners from the Banyumas, Banjarnegara, Cilacap, and Purbalingga districts, calculated based on the Krejcie and Morgan formula. Data were collected through randomly distributed questionnaires and analyzed using SPSS AMOS Version 23. The results show that financial anxiety is positively related to emotional Exhaustion and negatively associated with SME financial performance. Islamic financial literacy was found to moderate the relationship between financial anxiety and emotional Exhaustion, reducing the negative impact of financial anxiety. Emotional Exhaustion also negatively affects SME financial performance. These findings highlight the importance of enhancing Islamic financial literacy and stress management in addressing the adverse effects of financial anxiety and emotional Exhaustion. Interventions focusing on Islamic financial literacy and psychological wellbeing can improve the performance and sustainability of SMEs in Indonesia, helping them overcome financial and emotional challenges for long-term success.