<![CDATA[This study evaluates the mediating role of financial behavior in the relationship between financial self-efficacy and financial capability among employees/managers of batik micro, small, and medium enterprises (MSMEs) in the Special Region of Yogyakarta. Using purposive sampling of 150 respondents, data were analyzed through a PLS-SEM approach with SmartPLS 4.0. The results confirmed all four proposed hypotheses. Financial self-efficacy was found to have a direct and significant effect on financial capability (H1: β=0.659; t=12.947; p<0.000), indicating that psychological readiness enhances operational proficiency. An even stronger effect was found between financial self-efficacy and financial behavior (H2: β=0.746; t=15.375; p<0.000), suggesting that self-confidence shapes managerial routines. Financial behavior was also shown to significantly improve financial capability (H3: β=0.283; t=3.019; p=0.003). Bootstrapping tests confirmed the mediating role of financial behavior in the relationship between financial self-efficacy and financial capability (H4: indirect effect β=0.211; t=2.892; p=0.004). Because the direct path remained significant after including the mediator, the results confirm partial mediation, with a total effect of 0.870. The model demonstrated strong predictive relevance, with R² values of 0.557 for financial behavior and 0.470 for financial capability. These findings enrich Social Cognitive Theory by affirming that cognitive beliefs require practical enactment to generate real impact, rather than operating independently. Practically, programs aimed at strengthening financial self-efficacy among batik MSME actors should integrate structured digital financial record-keeping practices to support sustainable global competitiveness.]]>
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