The Effect of Fintech Adoption and Digital Accounting on The Financial Sustainability Of MSMES in Medan City

Abstract

This study examines the effect of Fintech Adoption and Digital Accounting on the Financial Sustainability of micro, small, and medium enterprises (MSMEs) in Medan City. An associative quantitative design was applied to a survey of 120 MSME owners and managers in the culinary, fashion, retail trade, and service sectors, selected through purposive sampling. Data were collected with a five-point Likert-scale questionnaire and analyzed using partial least squares structural equation modeling (PLS-SEM) in SmartPLS 4. The measurement model met all validity and reliability criteria. Fintech Adoption had a positive and significant effect on Financial Sustainability (β = 0.412; t = 4.873; p < 0.001), and Digital Accounting also had a positive and significant effect (β = 0.358; t = 4.126; p < 0.001). Together, the two variables explained 43.4% of the variance in Financial Sustainability, with medium effect sizes (f² = 0.236 and 0.178, respectively). The findings suggest that digital financial services and digital bookkeeping reinforce MSME financial sustainability, so support programs in Medan should promote both together rather than treating them as separate agendas