SUSTAINABLE FINANCE FOR RURAL SMEs: INTEGRATION OF CIRCULAR ECONOMY AND FINANCIAL DIGITALIZATION IN ECONOMIC CENTER VILLAGES

Abstract

Village transformation towards economic sustainability requires an integrated strategy between financial digitalization and the circular economy. This research aims to examine how the synergy between the two concepts not only encourages the achievement of sustainable finance, but also strengthens the sustainability of Micro, Small, and Medium Enterprises (MSMEs) in economic center villages. The method used was in the form of literature studies on eleven national and international journals and several relevant sources. The results of the study show that financial digitalization plays a role in increasing the financial inclusion of village communities through wider access to financing, budget management efficiency, and village financial transparency. On the other hand, the implementation of the circular economy encourages the optimization of local resource management with the principles  of reduce, reuse, and recycle which has an impact on community empowerment and environmental conservation. The integration of these two approaches is an important foundation for the formation of an inclusive, resilient, and sustainable village economic ecosystem. The sustainable finance resulting from this synergy has the potential to make villages the center of community-based local economic growth. This study recommends the implementation  of Environmental, Social, and Governance (ESG)-based policies, strengthening digital literacy, green finance incentives, and multi-stakeholder collaboration to support the acceleration of village transformation into competitive economic center villages.