Abstract
Financial well-being (FWB) is increasingly recognised as a key indicator of economic stability, particularly among micro-enterprise owners who operate under financial constraints. This study examines the effects of internal locus of control (ILoC) and financial capability (FC) on FWB, with specific attention to the moderating role of FC. Data were collected from 306 food and beverage micro-enterprise owners in Bogor, Indonesia, using structured questionnaires administered through face-to-face surveys. Structural equation modelling (SEM) was employed to test the proposed relationships. The findings indicate that both ILoC and FC have significant positive effects on FWB. Individuals who believe they can influence their financial outcomes tend to demonstrate better financial conditions, while those with higher financial capability are more effective in managing financial resources. In addition, FC was found to moderate the relationship between ILoC and FWB. However, the interaction effect shows a diminishing contribution of ILoC at higher levels of FC, suggesting that individuals with strong financial skills rely less on personal control beliefs in shaping financial outcomes. These results highlight the importance of combining psychological factors with practical financial skills in improving financial well-being. The study contributes to the literature by providing empirical evidence on the interaction between ILoC and FC in a micro-enterprise context. It also offers practical implications for policymakers and support institutions to design targeted financial education and capacity-building programmes for microentrepreneurs.
Keywords: Financial Capability, Financial Well-being, Internal Locus of Control, Micro-entrepreneurs, Moderating Effect.