• The Journal of Asian Finance, Economics and Business
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• v.8 no.2
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• pp.963-971
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• 2021

This study aims to determine the effect of financial literacy and taxation on competitive advantage, in order to determine the effect of financial literacy and taxation on the performance of MSMEs, and to determine the effect of competitive advantage on the performance of MSMEs. This study uses primary data through a questionnaire. The population is Creative MSME actors in DIY. Creative MSMEs in Yogyakarta were chosen because Yogyakarta is an area that is rich in traditional culture and various characters of its inhabitants, thus encouraging the development of the potential of Creative MSMEs. This research uses primary data sources on Creative MSMEs in Yogyakarta. The samples were determined by the proportional simple random sampling technique; taking a sample of 20% of the total Creative MSMEs in each district/city. The samples that deserve to be respondents in this study were 210 samples of Creative MSMEs actors in DIY. The statistical technique for analyzing data is the AMOS Structural Equation Modeling (SEM). The results showed that financial literacy had an effect on the competitive advantage and performance of MSMEs, tax literacy had an effect on competitive advantage, competitive advantage had an effect on the performance of MSMEs. However, tax literacy has no effect on the performance of MSMEs.