Does financial literacy matter for village-owned enterprises’ (VOEs) performance? Evidence from East Java Indonesia

Figures & data

Figure 1. Research location.

Table 1. Descriptive statistics of study’s variables

Variable	Measurement	Mean	Std.
Financial Literacy	Managers’ financial literacy score (0–6)	3.2715	1.4424
Return on Investment (ROI)	VOEs’ return on investment (%)	2.0958	0.1291
Profit	VOEs’ profit USD per-month	6732.5810	151.8868
Age	Age of the VOE manager in a year	47.0362	11.9346
Education	Education level of the VOE manager in a year	11.3575	3.7043
Marital status	Dummy, 1 if the VOE manager is married; 0 otherwise	0.9593	0.1981
Incentive	Dummy, 1 of the VOE provides an incentive for the employee; 0 otherwise	0.4842	0.5009
Employee	Numbers of VOE employees in person	27.1222	25.9366
Agriculture	Dummy 1 for agricultural VOEs; 0 otherwise	0.4887	0.5010
Distance	Distance from the VOE to the capital city of Blitar (km)	8.7172	9.5562
Digital market	Dummy, 1 if the VOE adopts the digital marketing; 0 otherwise	0.1900	0.3932
Local market	Dummy, 1 if the VOE focuses on the local market; 0 otherwise	0.6109	0.4887
Social Activity	Dummy, 1 if the VOE provides a social activity; 0 others	0.0995	0.3001
Promotion	Dummy, 1 the VOE spends financial allocation for promotion 0 otherwise	0.2398	0.4279
Transportation	Dummy, 1 if the VOE spends financial allocation for transportation, 0 otherwise	0.9774	0.1490
Social media	Dummy 1 if the VOE has social media, 0 otherwise	0.4615	0.4997
IV	Number of training sessions joined by the VOE Manager	6.5896	6.0503

Table 2. Mean differences in characteristics between agricultural and non-agricultural VOEs

Variable	Agriculture		Non-Agriculture		Diff
	Mean	Std. Dev	Mean	Std. Dev
Financial Literacy	2.9722	1.2444	3.4161	1.5117	−0.4439**
ROI	2.0706	0.1144	2.1079	0.1344	−0.0373**
Profit	6699.3370	123.4258	6748.6440	161.8242	−49.3070**
Age	46.4444	11.2161	47.3222	12.2933	−0.8777
Education	10.8056	3.4708	11.6242	3.7945	−0.8186
Marital status	0.9583	0.2012	0.9597	0.1973	−0.0014
Incentive	0.3333	0.4747	0.5570	0.4984	−0.2237***
Employee	29.5417	28.1239	25.9530	24.8254	3.5887
Distance	6.2292	3.6627	9.9195	0.9154	−3.6903***
Digital market	0.5972	0.4939	0.6174	0.4876	−0.0202
Local market	0.1667	0.3753	0.2013	0.4024	−0.0347
Social Activity	0.1528	0.3623	0.0738	0.2624	0.0790*
Promotion	0.2500	0.4361	0.2349	0.4254	0.0151
Transportation	1.0000	0.0000	0.9664	0.1807	0.0336
Social media	0.4722	0.5027	0.4564	0.4998	0.0158
IV	6.0097	4.1498	6.8698	6.7758	−0.8601

Note: * = sig 10%; ** = sig 5%; *** = sig 1%

Table 3. The determinants of financial literacy of VOEs managers: Tobit regression

Financial Literacy	Pooled	Non-agriculture	Agriculture
	Coef. (Std. Err.)	Coef. (Std. Err.)	Coef. (Std. Err.)
Age	−.0321 (.0050)***	−0.0250 (0.0062)***	−0.0393 (0.0084)***
Education	.1233 (.0170)***	0.1046 (0.0214)***	0.1443 (0.0254)***
Incentive	1.0369 (.1322)***	1.4044 (0.1724)***	0.6010 (0.1957)***
Marital	−.5889 (.2863)**	−0.4464 (0.3486)	−0.7348 (0.4333)*
Employee	.0091 (.0026)***	0.0101 (0.0027)***	0.0088 (0.0062)
Agriculture	.1417 (.1352)
Distance	−.0242 (.0070)***	−0.0162 (0.0098)	−0.0263 (0.0102)**
Digital market	.2286 (.1499)	0.0309 (0.1856)	0.4781 (0.2450)*
Local market	.0983 (.1269)	−0.1664 (0.1618)	0.3873 (0.1860)**
Social Activity	−.1087 (.1926)	0.0768 (0.2322)	−0.1627 (0.3111)
Promotion	−.2558 (.1402)**	−0.2852 (0.1660)*	−0.1730 (0.2407)
Transportation	.1355 (.3790)	−1.3881 (0.7616)*	0.5378 (0.4368)
Social media	.0037 (.1282)	0.1477 (0.1631)	−0.0777 (0.2051)
Training	.0616 (.0112)***	0.0519 (0.0118)***	0.0811 (0.0296)***
Constant	2.7670 (.5783)***	3.9111 (0.8864)***	2.6909 (0.8366)***
var(e.fl)|	.6579 (.0626)	0.5445 (0.0724)	0.6524 (0.0888)
Log-likelihood	−267.3226	−125.9975	−130.1841
LR chi2(15)	253.4300	151.0200	124.5300
Prob > chi2	.0000	0.0000	0.0000
Pseudo R2	.3216	0.3747	0.3235

Note: * = sig 10%; ** = sig 5%; *** = sig 1%

Table 4. The impact of financial literacy and control variables on VOEs performance: a pooled model

Variables	Profit	Return on Investment
	Coef. (Std. Err)	Coef. (Std. Err)
Financial literacy	.0090 (.0027)***	0.0332 (0.0080)***
Age	−.0004 (.0001)***	−0.0006 (0.0003)*
Education	.0012 (.0004)***	0.0012 (0.0012)
Incentive	.0057 (.0039)	0.0091 (0.0117)
Marital	−.0039 (.0046)	0.0234 (0.0139)*
Employee	.0000 (.0000)	−0.0001 (0.0001)
Agriculture	−.0021 (.0021)	−0.0038 (0.0062)
Distance	.0000 (.0001)	0.0003 (0.0003)
Digital market	.0042 (.0024)*	−0.0119 (0.0071)*
Local market	.0018 (.0020)	0.0030 (0.0060)
Social Activity	.0002 (.0029)	−0.0028 (0.0088)
Promotion	−.0022 (.0021)	0.0037 (0.0063)
Transportation	−.0014 (.0059)	−0.0038 (0.0176)
Social media	−.0009 (.0020)	−0.0021 (0.0059)
Constant	8.7922 (.0117)***	0.6220 (0.0350)***
F-Value	35.1100	25.6000
Prob > F	.0000	0.0000
R-squared	.7047	0.6350
Adj R-squared	.6846	0.6102
Root MSE	.0125	0.0375

Note: * = sig 10%; ** = sig 5%; *** = sig 1%

Table 5. The impact of financial literacy and control variables on VOEs performance: a disaggregate estimation

profit	Non-agriculture		Agriculture
	Profit	ROI	Profit	ROI
	Coef. (Std. Err.)	Coef. (Std. Err.)	Coef. (Std. Err.)	Coef. (Std. Err.)
Financial literacy	0.0064 (0.0030)**	0.0305 (0.0083)***	0.0092 (0.0065)	0.0332 (0.0209)***
Age	−0.0003 (0.0001)**	−0.0002 (0.0004)	−0.0005 (0.0002)*	−0.0010 (0.0008)
Education	0.0013 (0.0005)***	0.0007 (0.0013)	0.0014 (0.0009)	0.0019 (0.0027)
Incentive	0.0143 (0.0048)***	0.0240 (0.0136)*	−0.0020 (0.0079)	−0.0091 (0.0252)
Marital	−0.0020 (0.0056)	0.0246 (0.0159)	−0.0075 (0.0080)	0.0209 (0.0257)
Employee	0.0000 (0.0001)	−0.0001 (0.0001)	0.0000 (0.0001)	0.0000 (0.0004)
Distance	0.0001 (0.0001)	0.0007 (0.0004)*	−0.0001 (0.0002)	0.0001 (0.0005)
Digital market	−0.0011 (0.0030)	−0.0277 (0.0084)***	0.0128 (0.0042)***	0.0104 (0.0134)
Local market	0.0008 (0.0026)	−0.0020 (0.0072)	0.0038 (0.0030)	0.0096 (0.0097)
Social activity	0.0052 (0.0036)	0.0015 (0.0102)	−0.0017 (0.0048)	0.0032 (0.0153)
Promotion	−0.0011 (0.0025)	0.0011 (0.0070)	−0.0045 (0.0040)	0.0060 (0.0129)
Transportation	−0.0168 (0.0120)	−0.0547 (0.0338)	0.0017 (0.0069)	0.0072 (0.0221)
Social media	0.0010 (0.0026)	0.0017 (0.0072)	−0.0017 (0.0032)	−0.0044 (0.0103)
Constant	8.8053 (0.0159)***	0.6635 (0.0447)	8.7935 (0.0248)***	0.6219 (0.0792)
F-value	22.7600	20.4100	19.3100	11.5800
Prob > F	0.0000	0.0000	0.0000	0.0000
R-squared	0.7493	0.7282	0.7275	0.6156
Adj. R-squared	0.7164	0.6926	0.6899	0.5625
Root MSE	0.0116	0.0327	0.0127	0.0407

Note: * = sig 10%; ** = sig 5%; *** = sig 1%

The dependent variables are log-transformed

Table A1. Pearson correlation test for validity of instrumental variable

Variables	Instrumental Variable
Financial literacy	0.319
	0.000***
Profit	−0.021
	0.762
ROI	0.107
	0.112

Note: *** = sig 1%

Data availability statement

The data that support the findings of this study are available from Moh Shadiqur Rahman upon request.