The Mediating Role of Business Document Readiness between Financial Literacy and BUMDes Effectiveness in Pesawaran Regency

Abstract

This study analyzes the influence of financial literacy on the effectiveness of Village-Owned Enterprises (BUMDes) through the readiness of business documents as a mediator in the context of strengthening village businesses. The study used a mixed methods explanatory sequential design. Quantitative data were obtained from 80 respondents involved in the management or governance of seven BUMDes in Pesawaran Regency, then analyzed using PLS-SEM with SmartPLS 4. The qualitative stage involved 10 core administrators to explain the quantitative results. Financial literacy has a positive effect on the readiness of business documents (β = 0.458; p < 0.001), while the readiness of business documents has a positive effect on the effectiveness of BUMDes (β = 0.506; p < 0.001). The direct effect of financial literacy on effectiveness is not significant (β = 0.022; p = 0.875), but the indirect effect is significant (β = 0.232; p = 0.001). The findings demonstrate indirect-only mediation and emphasize the importance of transforming the financial capabilities of managers into documented, accountable, consistent, and sustainable administrative practices that organizations can use.